PETALING JAYA: Business – Malaysian manufacturing rebounds to 43-month high in November

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PETALING JAYA: The headline Nikkei Malaysia Manufacturing Purchasing Managers’ Index (PMI) – a composite single-figure indicator of manufacturing performance – rose to a 43-month high of 52.0 in November from October’s three-month low of 48.6, the strongest improvement in Malaysia’s manufacturing sector since April 2014.

Furthermore, the headline PMI recorded above the neutral 50.0 threshold for the first time in three months in November.

The rise in the headline PMI was supported by the fastest expansion in output in nearly three years. Output growth was reportedly supported by stronger inflows of new work. Moreover, the rate of expansion in new orders was the most pronounced since October 2014. A number of monitored companies commented on stronger underlying demand conditions.

Amid reports of stronger overseas demand for Malaysian goods, new export order growth accelerated to the joint-second fastest (behind June 2013) since the inception of the series in July 2012.

The degree of business confidence towards the 12-month outlook for output was the strongest in nearly four years. Positive projections for stronger demand conditions and new projects were cited as the key factors behind the positive sentiment.

Commenting on the Malaysian Manufacturing PMI survey data, Aashna Dodhia, economist at IHS Markit, which compiles the survey, said November data indicated a long-awaited improvement in the health of the manufacturing sector.

“These positive developments fuelled job creation at the joint-strongest rate since December 2012. Moreover, business confidence among the manufacturing community was the strongest in nearly four years.”

Aashna said inflationary pressures proved to be an impediment to business performance, with reports of suppliers struggling to obtain raw materials. Subsequently, vendor performance deteriorated for the first time in three months.

“Reflecting an increase in overseas demand for Malaysian goods, new export orders rose at the joint second-fastest rate in the series’ history. Overall, growth momentum in Malaysia is likely to be sustained towards the end of the year.”

Reversing the reduction in the preceding month, companies were encouraged to raise their payroll numbers in November. Although modest, job creation picked up to the joint fastest since December 2012.

Manufacturing firms increased their purchasing activity, thereby ending a six-month period of contraction. Meanwhile, firms raised their pre-production inventories to the greatest extent since March 2015.

Raw material shortages reportedly resulted in slower average lead times for the first time in three months. However, the degree of deterioration in vendor performance was modest.

Amid reports of a general increase in raw material prices, input cost inflation intensified and was sharp overall.

Meanwhile, firms raised their average selling prices to pass on higher cost burdens to consumers. That said, output charges were raised at a moderate overall rate.

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THE SUN DAILY | Posted on 4 December 2017 – 11:46am | Last updated on 5 December 2017 – 12:14am | [email protected]

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