• Coronavirus sends Malaysia’s manufacturing PMI lower

• Global manufacturing suffers as Covid-19 outbreak hits supply chains and demand

• US manufacturing activity slows as coronavirus spreads around the world

• Eurozone manufacturing ticks up but remains in contraction territory

• UK manufacturing output jumps but coronavirus looms

• China’s manufacturing activity plunges to all-time low

• Japan’s manufacturing output hit by biggest drop in new orders since December 2012

• ASEAN manufacturing sector saw a tentative improvement

Coronavirus sends Malaysia’s manufacturing PMI lower

Malaysia's manufacturing PMI fell to 48.5 in February, from 48.8 in January, as the manufacturing sector was adversely impacted by shortfalls of inputs and falls in export orders from China due to the coronavirus outbreak. This was the steepest contraction in factory activity since September last year. Production across the Malaysian manufacturing sector was adversely impacted by shortfalls of inputs. The output index slipped to an eight-month low in February, signalling softening momentum. Overseas demand was also adversely impacted, causing new export orders to fall at the steepest rate in over seven years. Total new order intakes were subsequently placed under pressure due to the unfavourable external environment. Overall, the survey's new order index fell to its lowest since last September. Firms reported a reduction in both buying levels and inventories. Employment was also reduced as some firms opted to not renew contracts for some employees given the possibility of production being constrained by an uncertain supply of inputs. On the price front, input price inflation accelerated slightly, while selling prices fell fractionally, amid efforts to stimulate demand and boost competitiveness. However, the 12-month ahead outlook for manufacturing output remained positive in February as some companies foresee a pickup in economic growth. However, the degree of optimism slid to a 20-month low as uncertainty towards raw material supplies and demand conditions weighed on confidence.

Source: BIMB Securities Research - 3 Mar 2020