The manufacturing PMI hit another speed bump in the month of February. It slowed down for the second consecutive month to 47.7 from January’s 48.9, marking the lowest reading since May 2020. Manufacturing activities were dampened by the MCO 2.0 and restrictive measures adopted by many other countries.

The weak manufacturing PMI reading is in line with our Asean peers e.g. Thailand which also showed a February manufacturing PMI which were below the “50” mark threshold, denoting contraction for the second time since September 2020.

Despite a weak manufacturing PMI reading in February, optimism remains. The deployment of vaccines, improving global trade and GDP, stimulus measures and renewed confidence will bode well for manufacturing activities. The domestic economy is projected to grow around 5.2% to 5.9%.

• The local manufacturing business conditions sector experienced another speed bump as February’s manufacturing PMI slowed down for the second consecutive month to 47.7 from January’s 48.9, marking the lowest reading since May 2020.

• The slowdown was due to the implementation of the MCO 2.0 and restrictive measures to contain the virus spread. The restrictive measures saw both manufacturing output and overseas demand soften in February.

• Underpinned by the restrictive measures, firms experienced renewed challenges in sourcing and delivering raw materials as the restrictive measures disrupted the supply chain to some degree. Thus, upwards pressure on input prices remain. It is reflected in January’s factory gate price which rose by 2.0% y/y from 1.7% y/y in December 2020, the fastest growth since November 2017.

• Malaysia’s manufacturing PMI reading fell in line with our Asean peers. Similarly, Thailand unveiled its February manufacturing PMI which is below the “50” mark threshold, denoting contraction for the second time since September 2020.

• Despite a weak manufacturing PMI reading in February, optimism remains. The deployment of vaccines, improving global trade and GDP, stimulus measures and renewed confidence will bode well for manufacturing activities. The domestic economy is projected to grow around 5.2% to 5.9%.

Source: AmInvest Research - 2 Mar 2021