• Malaysia’s manufacturing remains weak as PMI slips to 47.4

• Global manufacturing deteriorated in August

• US ISM manufacturing activity lowest since September 2009

• Eurozone manufacturing slump continues in August

• UK manufacturing fell to a seven-year low in August

• China’s manufacturing PMIs conflicting

• Japan’s manufacturing continued to signal difficult conditions

• ASEAN manufacturing PMI deteriorated at the fastest pace

Malaysia’s manufacturing remains weak as PMI slips to 47.4

Malaysia’s manufacturing PMI fell to 47.4 in August 2019 from 47.6 in August. This was the eleventh straight month of contraction in the manufacturing sector. Latest PMI data highlighted some of the challenges facing Malaysian manufacturers at the midway point of the third quarter, with the survey signalling tough demand conditions and rising cost pressures. Although the seasonally adjusted output index dipped in August, the fall was only fractional. Analysis of comparable historical official data on Malaysian manufacturing suggests that, at current levels, the survey’s output index is consistent with annual production growth of just below 4%. According to anecdotal evidence, new product launches had supported output during August. Export sales falling further on the back of challenging demand conditions and intense pressure. At the same time, new orders stagnated, while output index was relatively steady. Meantime, employment grew for the first time in three months as firms enhanced operating capacities, with backlogs of works declining for the twelfth month in a row. On the price front, operating costs were higher amid reports of currency fluctuations, rising commodity prices and shortages of certain raw materials. Consequently, output charges rose the most in nine months. Lastly, sentiment strengthened to its highest level since October 2013, boosted by planned promotional activity, new products, work in the pipeline and forecasts of improved domestic and external demand.

Source: BIMB Securities Research - 4 Sept 2019