The manufacturing PMI deteriorated further in August. It has remained in the negative region for 11 consecutive months. In August, the reading was 47.4 compared with 47.6 in July. Our weak manufacturing PMI performance is in line with countries like Singapore and Indonesia. Based on the two months of 3Q2019 PMI, it suggests that the economy could ease during the quarter. Our preliminary estimate suggests that the economy could grow around 4.6% y/y.

• The manufacturing industry’s health deteriorated further in August. The August Manufacturing Purchasing Manager's Index (PMI) remained in the negative region for 11 consecutive months. The demarcation between expansion and contraction is 50.

• In August, the reading was 47.4 compared with 47.6 in July. Weighed down by sustained softening demand conditions, and exacerbated by intense competition and lower new orders from overseas clients amidst rising concerns on the trade war, production volume has tapered further in August.

• Manufacturing players also reported higher operating costs owing to a weakening MYR – falling on average by 1.7% m/m in August to 4.19 against the dollar – rising commodities prices, and lack of supply for certain raw materials.

• Meanwhile, in the Asean region, the manufacturing condition deteriorated to the weakest since November 2015 at 48.9 compared with 49.5 in July. The poor showing was due to lacklustre business flows and falling output. Singapore registered a severe downturn with its August PMI reading at 42.9, marking an all-time low. Meanwhile, Indonesia posted a lower PMI at 48.1 in August from 48.5 in July.

• However, other Asean economy remained in the expansion region albeit slower in August, with Vietnam at 51.4 from 52.6, Myanmar 52.0 from 52.9, the Philippines 51.9 from 52.1, and Thailand 50.0 from 50.3.

• Based on the two months of 3Q2019 PMI, it suggests that the economy could ease during the quarter. Our preliminary estimate suggests that the economy could grow around 4.6% y/y.

Source: AmInvest Research - 4 Sept 2019