Headline IHS Markit Malaysia PMI climbed to 49.3 in October, chalking up a six-month high, after recording 47.9 in September. Although this indicates a stable production trend, overall business conditions in the manufacturing sector remain challenging.
The October PMI reading comes at a point where the global PMI is showing worldwide economic growth slipping closer to three-year lows mid-way through 3Q2019, led by the steepest drop in global trade since 2012. In the current situation, we foresee our GDP growing between 4.5% and 5.0% in 4Q2019.
- Headline IHS Markit Malaysia Manufacturing Purchasing Managers’ Index (PMI) rose to a six-month high of 49.3 in October, up from 47.9 in September. The reading of 50 separates expansion from contraction.
- The output index picked up slightly in October, but held close to the levels seen across 3Q2019, indicating a stable production trend. It showed demand conditions have presented some signs of stabilization in October. There has been evidence of improved sales to existing customers that led to a rise in the new orders index. New product launches are anticipated to drive production volumes in the coming year, with business optimism subsequently remaining strong.
- Still, the overall business conditions in the manufacturing sector remain challenging. This is despite witnessing some signs of improvement in the new orders and output. Export orders were still depressed. Manufacturers held out for price discounts amid strong competitive pressures.
- Besides, a darkening global economic environment and geopolitical concerns continued to tamper firms’ optimism. It is not surprising given the ongoing external headwinds. But at least businesses are a bit more upbeat of the upward momentum being regained.
- The October PMI reading comes at a point where the global PMI is showing worldwide economic growth slipping closer to three-year lows mid-way through 3Q2019, led by the steepest drop in global trade since 2012. In the current situation, we foresee our GDP growing between 4.5% and 5.0% in 4Q2019.
Source: AmInvest Research - 4 Nov 2019