Malaysia’s manufacturing sector saw an upbeat development going into the final quarter of 2021 when the headline figure in IHS Markit Manufacturing PMI rose to 52.2 for October from September’s print of 48.1.

Moving forward, we can expect that the sector to continue improving driven by healthy global demand, the reopening of economies, strong commodity prices and steadily outperforming electrical & electronic manufacturers. For the full year of 2021, we maintain our projection that the economic growth will hover around 3.0%–3.5%.

A. Key Highlights

• After four consecutive months of contraction in the headline IHS Markit Malaysia manufacturing Purchasing Managers’ Index (PMI), the indicator crossed into the growth zone at 52.2 for the month of October.

• This shows that the manufacturing sector is now back on track towards recovery as severe pandemic restrictions effects subside. This also signals the positive development in Malaysia’s overall economic conditions.

• Although manufacturers have pointed out that input materials and container shortages have pushed the cost price factor upwards and constrained recovery progress, this in turn, has caused manufacturers to raise their output price.

• The better reading was also supported by the improving production, new order volumes, surging outstanding orders and an elevated positive outlook offset by contracted employment, and slow purchasing activity, attributed to a supply chain crunch.

B. Key Takeaways

• Moving forward, we can expect the sector to continue improving driven by healthy global demand, the reopening of economies, strong commodity prices and steadily outperforming electrical & electronic manufacturers amidst the ongoing supply chain disruption and higher input prices.

• For the full year of 2021, we are maintaining our projection that the economy will grow in the range of 3.0% to 3.5%.

Source: AmInvest Research - 2 Nov 2021