The headline IHS Markit Malaysia Manufacturing PMI eased to 51.3 in May 2021 from a record high 53.9 in April. The latest reading signalled a further improvement in the health of the sector, and the first time back-to-back monthly improvements that have been reported since mid-2018.
Businesses signalled that the recovery in the Malaysian manufacturing sector continued in May. New order inflows rose for the second month in a row during May as manufacturers commonly reported strong local demand for goods. That said, the pace of the expansion eased from April as the latest restrictions dampened client confidence. However, stricter measures to combat a renewed surge in COVID-19 infections had an adverse impact on production volumes, which moderated following a solid expansion in April. At the same time, new export orders lost momentum in May as COVID-19 related disruptions in international markets intensified as infections rose in many countries. Malaysian manufacturers reported that employment fell slightly for the second month in a row in May as businesses indicated lower production requirements. Goods producers continued to report significant supply chain delays during May. Supplier delivery times lengthened at a sharp pace once again as restrictions to combat COVID-19 both in Malaysia and key external markets were tightened. Difficulties in sourcing and receiving raw materials contributed to a further sharp rise in raw material prices. As a result, input costs rose for the twelfth time in as many months in May. Factory gate prices also increased in the latest survey period, as firms partially passed higher costs to clients. Uncertainty about the speed of the economic recovery from the pandemic dampened overall sentiment among manufacturers, though firms remained optimistic on balance that output would increase over the coming 12 months
Outlook. Malaysia manufacturing PMI eased from a record high 53.9 in April to 51.3 in May. However, the impact of the latest tightening of restrictions is yet to feed through to official statistics, though the latest PMI data suggest that the sector has stagnated during May. Despite the easing of growth in May, the PMI continues to suggest that 2Q21 will see the strongest manufacturing upturn since the survey began in 2012, but the concern is that the virus could continue to weaken growth in coming months. So far, Malaysia's burgeoning trade performance has been a bright spot. Exports surged 63.0% yoy, whilst imports grew 24.4% yoy. An increase in intermediate goods and capital goods is a welcome sign that Malaysia is ramping up manufacturing production for exports. The gradual unwinding of pandemic restrictions around the world has led to an upturn in manufacturing and trade activity. Nevertheless, the reimposition of tighter domestic restrictions from 1 to 14 June is a temporary setback to the economy. However, we expect the export-oriented sector to rebound faster post-phase 1 of the MCO given that the global demand for Malaysia’s key export products and trading partners remains fairly strong. We continue to expect higher trade growth in the near term, mainly due to the low base effect in 2020, along with continued demand from major trading partners on the back of their economic recovery. Nonetheless, we are also cautious as the recent COVID-19 resurgence both domestically and regionally may disrupt the manufacturing activities and supply chain due to the movement restriction imposed to contain the spread of the virus. Future growth expectations took a knock in May, as the renewed wave of infections served as a reminder that the virus remains a significant risk to the outlook.
The global manufacturing sector expanded at a robust pace in May. Production rose at one of the fastest rates in a decade, as new order growth accelerated to an 11-year high. The J.P. Morgan Global Manufacturing PMI posted 56.0 in May, up from 55.9 in April, to register its highest level in over 11 years (April 2010). Solid improvements in business conditions were seen across the consumer, intermediate and investment goods sectors. Pressure on capacity continued to build during May. Average vendor lead times lengthened to the greatest extent in the survey history, while backlogs of work at manufacturers rose at a near survey-record pace. This fed through to increased inflation, as highlighted by the steepest rise in input costs for over a decade and record inflation of selling prices. Delays in the receipt of goods ordered from suppliers combined with higher production needs encouraged manufacturers to raise purchasing levels in May. Buying activity expanded for the tenth month in a row and to the second-greatest extent on record. This led to a slight gain in pre-production stocks for a second successive month. In contrast, finished goods inventories fell further. The outlook remained positive, with manufacturers forecasting further increases in output over the next 12 months.
Source: BIMB Securities Research - 2 Jun 2021
Created by kltrader | Aug 12, 2024
Created by kltrader | Aug 12, 2024
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Created by kltrader | Aug 09, 2024