KUALA LUMPUR: Malaysian manufacturers are optimistic of better demand ahead despite moderating manufacturing activities in October, amid subdued inflow of new orders, said S&P Global.
The seasonally adjusted S&P Global Malaysia Manufacturing Purchasing Managers’ Index (PMI) posted 49.5 in October, the lowest in four months, down from 49.8 in September.
In a statement today, S&P Global said that despite only coming in marginally below the neutral 50.0 threshold, the index signalled that business conditions moved further into moderation territory over the course of the month.
S&P Global Market Intelligence economist Usamah Bhatti said October data indicated another moderation in the health of the Malaysian manufacturing sector, signalling challenging operating conditions at the start of the fourth quarter.
He said firms recorded a renewed decline in new orders, which contributed to a sustained scaling back of production volumes.
"Muted conditions also fed into firms’ decisions on employment and stock holdings, all of which moderated during October,” Usamah said.
Encouragingly, he noted manufacturers cited stronger optimism regarding the outlook for the year ahead.
S&P Global said the overall degree of optimism was strong, marking the most pronounced level since April 2023, as firms were confident that new orders would expand, thereby feeding through to higher output.
"Positive sentiment reached a two-and-a-half-year high amid hopes that new orders will increase. Concurrently, firms chose to absorb a strengthening of cost pressures by reducing output charges for the first time in six months in an attempt to boost demand,” Usamah added.
S&P Global said based on the historical relationship between the Malaysia PMI data and official output numbers, the latest PMI reading suggests that both gross domestic product and official manufacturing production increased solidly on an annual basis at the start of the final quarter of the year. - Bernama
