• Malaysia manufacturing rises to 43-month high

• Global manufacturing growth accelerates to 80-month high

• US manufacturing index indicates modestly slower growth in November

• Eurozone factory growth near record high

• UK manufacturing sector growth fastest since 2013

• China’s manufacturing activity holds up

• ASEAN manufacturing improves further in November

Malaysia manufacturing rises to 43-month high

Manufacturing PMI in Malaysia surged to 52.0 in November from 48.6 in October. It was the first expansion in manufacturing activity since August and the strongest since April 2014. The overall upturn reflected accelerated growth in both output and new orders, supported by improvements in domestic and overseas demand conditions. Output grew at the fastest pace since December 2014 as it rises to 52.2 from 50.2 in October. Output growth was reportedly supported by stronger inflows of new work. New orders rose the most since October 2014 and new export order growth accelerated to the joint-second fastest since the survey began in mid-2012. In addition, job creation went up at the quickest rate since December 2012 and buying activity rose for the first time in seven months. However, firms continued to face further sharp inflationary pressures. This placed pressure on profit margins as companies were unable to fully pass on higher cost burdens to price-sensitive customers. Meanwhile, the degree of business confidence towards the 12- month outlook for output was the strongest in nearly four years. Positive projections for stronger demand conditions and new projects were cited as the key factors behind positive sentiment.

Outlook. The manufacturing sector surged to 7.0% in 3Q17 from 6.0% registered in the prior quarter. The faster pace of growth was stimulated by broad-based improvement in both, export and domestic oriented industries. Malaysia’s PMI has largely been below the 50-mark level this year and November’s manufacturing PMI data indicated a long-awaited improvement in the health of the manufacturing sector. The headline PMI rose to its highest level since April 2014, underpinned by stronger demand conditions. Subsequently, growth in output and new orders were the fastest since December 2014 and October 2014 respectively, in turn shoring up confidence and driving employment higher. Looking ahead, encouraging trend of IPI growth, strong export performance and continued robust demand from global trade, we expect the industrial performance in Malaysia to stay on steady pace.

Global manufacturing growth accelerates to 80-month high

November saw the upturn in the global manufacturing sector strengthen, with rates of expansion in output, new orders and employment all hitting multi-year highs. This was signalled by the Global Manufacturing PMI rising to 54.0 in November, up from 53.5 in October and its highest reading since March 2011. The headline PMI has signalled expansion for 21 consecutive months. Growth remained sharper in developed nations compared to emerging markets. The euro area was a bright spot, with its PMI rising to a near-record high. Rates of increase also strengthened in Japan, UK, Australia and Canada. Growth slowed slightly in the US, but remained solid overall. In the main emerging nations, growth eased to a five month low in China, but accelerated in India, Brazil and Russia.

Source: BIMB Securities Research - 5 Dec 2017