Our Nikkei Manufacturing PMI unveiled continued deterioration with March’s reading down to a three-month low at 47.2, the lowest since December 2018’s reading of 46.8. It is the sixth straight month of contraction since October 2018. However, we found the business condition contradicts that in Asean neighbours like Vietnam and Myanmar, which improved for the first time in 2019. The Nikkei Asean Manufacturing PMI rose to 50.3 in March as manufacturers expanded their output on the back of a slight rebound in new orders.

Based on anecdotal evidences, we expect Malaysia’s business conditions to remain tough in the near term as both output and new orders are still weak, implying member companies under the PMI are struggling to lift their production owing to harsher demand conditions, especially those depending on the export market. Besides, manufacturers are cautious on the inventory levels, with both pre- and post-production stocks falling. Although holdings of finished items depleted as firms stepped up efforts to ship orders in a timely fashion, buying remained low.

• The Nikkei Manufacturing Purchasing Managers’ Index (PMI) deteriorated to a three-month low in the month of March. The PMI’s reading in March was at 47.2, down from 49.6 in February. It turned out to be the lowest since December 2018’s reading of 46.8 and is the sixth straight month of contraction since October 2018.

• We found Malaysia’s business condition contradicted that of Asean neighbours like Vietnam and Myanmar where their business environment improved for the first time in 2019. The Nikkei Asean Manufacturing PMI rose to 50.3 in March from 49.6 in February, as manufacturers expanded their output more quickly on the back of a slight rebound in new orders.

• Based on anecdotal evidences, we expect Malaysia’s business condition to remain tough in the near term. Our concern is that both output and new orders are still weak. It clearly showed that member companies under the PMI are struggling to lift their production owing to harsher demand conditions, especially those depending on the export market.

• Besides, manufacturers are being cautious on the inventory levels, with both pre- and post-production stocks falling. Although holdings of finished items depleted as firms stepped up efforts to ship orders in a timely fashion, buying remained low.

Source: AmInvest Research - 2 Apr 2019