• Malaysia manufacturing sector lost further momentum

• Global manufacturing output growth accelerated in February

• US manufacturing activity gains further momentum in February

• Eurozone manufacturing sector grew at a fastest pace in three years

• UK factory output slows amid Brexit and COVID-19 disruption

• China’s manufacturing activity grows at slowest pace

• Japan manufacturing sector grows for the first time since April 2019

• ASEAN manufacturing slips back into contraction in February

Malaysia manufacturing sector lost further momentum

The Malaysian manufacturing sector lost further momentum during February. The headline IHS Markit Malaysia Manufacturing PMI dipped from 48.9 in January to 47.7 in February. This reading indicated a further moderation in the health of the manufacturing sector, although the deterioration was considerably less marked than that seen during the first wave of the pandemic in April 2020. Both production and new order volumes weakened in February. Though quicker than January, the rates of deterioration remained markedly softer than the peak rates of decline seen last April. Foreign demand for Malaysian manufactured goods was subdued as firms highlighted strict measures to curb COVID-19 infections in key international markets. That said, the pace of reduction in export sales fell at a softer pace than total new orders. At the same time, the rate of job shedding at Malaysian manufacturing firms edged towards stabilisation in the latest survey period. Employment levels fell only marginally in February and at a pace that was softer than the previous month. Increased demand and shortages of raw materials meanwhile contributed to an increase in input costs for the ninth consecutive month in February. The pace of input cost inflation softened slightly from January, yet remained marked overall. Ongoing supply chain disruptions often meant that businesses reported difficulties in sourcing inputs for production, reflected in a fall in purchasing activity. Looking forward, firms operating in the Malaysian manufacturing sector were increasingly optimistic regarding the 12-month outlook for production. Positive sentiment strengthened to the highest for five months

Source: BIMB Securities Research - 2 Mar 2021