KUALA LUMPUR: Malaysia’s seasonally adjusted S&P Global manufacturing purchasing managers’ index (PMI) rose slightly to 50.2 in January from 50.1 in December, staying just above the neutral 50.0 mark.
The reading signalled a third consecutive monthly improvement in manufacturing conditions and was the joint-highest since August 2022, matching May 2024.
S&P Global Market Intelligence economist Maryam Baluch said the Malaysian manufacturing sector signalled strengthening business conditions for the third straight month in January.
“Production returned to growth, while demand conditions stabilised. The latter was supported by a renewed strengthening in demand from overseas. Moreover, companies reported a brighter outlook. Confidence was, in fact, among the highest in the series history.
"Another key element from the latest survey was a first fall in input costs since May 2020 as firms benefited from the effects of a stronger ringgit. A lack of inflationary pressures should hopefully help to support growth in the months ahead,” she said.
S&P Global said historical correlations between PMI movements and official data suggest the economy entered the new year with steady GDP growth, alongside continued year-on-year expansion in official manufacturing production.
The slight uptick in the headline index was underpinned by a renewed increase in manufacturing output in January, with the seasonally adjusted output index returning to expansion territory for the first time in five months and recording its strongest growth since July 2022.
Demand conditions stabilised after a slight moderation previously, with anecdotal evidence pointing to subdued but improving demand at the start of the year.
Meanwhile, new export orders increased for the first time in five months, and at the fastest rate since July 2024.
S&P Global noted that in line with higher production requirements, manufacturers increased purchasing activity modestly in January, resuming growth after a pause in the previous month. The latest upturn, matching the increase seen in September 2025, was the strongest in 45 months.
The increase in purchasing activity helped partially offset the continued decline in pre-production inventories, with the rate of contraction easing to a marginal level. Holdings of finished goods were also reduced at a slower pace.
Meanwhile, after December’s near-record job creation, manufacturing firms cut staffing levels in the latest survey period, although the pace of job losses was minimal.
“Manufacturers managed to keep on top of their workloads, as backlogs fell for a fourth straight month. That said, the pace of depletion was the weakest in the aforementioned sequence,” S&P Global said.
It noted that supplier capacity pressures persisted, with delivery times lengthening for a second straight month in January, though delays remained modest overall.
On prices, the survey showed input costs fell for the first time in 68 months, partly due to the appreciation of the ringgit, which lowered import costs.
The rate of charge inflation, meanwhile, accelerated in January
but remained modest and weaker than the series average. Output prices have now increased in the last three survey periods.
Lastly, business sentiment on output prospects rebounded in January, supported by expectations of new contracts and signs of improving demand. Overall optimism was the second-highest since October 2013, behind only November 2025.
