• Malaysia’s manufacturing PMI contracts further in May

• Global manufacturing PMI posts lowest reading since October 2012

• US manufacturing activities dips lower

• Eurozone manufacturing activities continues to contract

• UK manufacturing activities moved into contraction in May

• China’s manufacturing PMI edges down

• Japan manufacturing PMI slips into contraction

• ASEAN manufacturing PMI improves marginally

Malaysia’s manufacturing PMI contracts further in May

The manufacturing sector in Malaysia continued to contract in May, and at a faster rate. Malaysia’s Nikkei manufacturing PMI recorded 48.8 in May, down slightly from April’s seven-month high of 49.4 but below the long-run average. Latest survey data revealed further challenges for Malaysian manufacturers during May, with firms continuing to report a weakening demand environment, particularly in international markets. Manufacturing output remained under pressure during May, reflecting challenging demand conditions facing the sector. New export orders subsequently returned to contraction in May. However, despite continuing to signal a headwind from weak demand, the survey gauge of total new orders is running at its secondhighest since 3Q18 so far in 2Q19. Manufacturing employment was broadly stable. Purchasing activity also declined in May, partly due to an increased focus on cost control amid slower production growth. Meanwhile, prices indicated a pickup of inflationary pressures in May. Anecdotal evidence indicated that unfavourable exchange rate variations had exacerbated raw material price increases, leading overall operating costs to rise at the fastest pace since last November. Output prices increased at the quickest rate in six months as firms sought to protect margins. On a positive note, Malaysian manufacturers were the most upbeat towards future output volumes since October 2013.

Source: BIMB Securities Research - 4 Jun 2019