Malaysia manufacturing turns to expansion in October
The headline IHS Markit Malaysia Manufacturing PMI rose to 52.2 in October from 48.1 in September, the strongest expansion in the health of the Malaysian manufacturing sector since April. The Malaysian manufacturing sector saw growth return at the start of the fourth quarter of 2021, as the lifting of COVID-19 restrictions contributed to the strongest expansion in new orders since April and the first rise in production in six months.
Both production and new order volumes returned to expansion territory in October. Foreign demand for Malaysian manufactured goods meanwhile remained subdued, though the pace of reduction in export sales was the softest since May as firms noted pockets of stronger demand in Europe and the US. At the same time, the rate of job shedding quickened slightly from September. Employment levels fell marginally in October, mainly due to firms reporting a lack of available staff. However, while looser virus containment measures are helping drive demand higher, supply has yet to catch up, with companies again reporting widespread issues with component shortages, shipping delays and a lack of containers, all of which colluded to drive prices up at an increased rate in October. Firms sought to partially pass higher cost burdens onto clients, causing output charges to rise steeply. This extended the current sequence of inflation to 17 months, with the latest increase the fastest since April. Despite the rise in output and new orders, businesses reported that purchasing activity remained subdued at the start of the fourth quarter. Supply and demand clearly remain out of balance, and will do so for some time to come, acting as a constraint on growth and putting upward pressure on prices. Nonetheless, Malaysian manufacturers expressed optimism regarding the year-ahead outlook for the fourth month running in October.
Outlook. After four consecutive months of contraction in the headline IHS Markit Malaysia manufacturing PMI, the indicator crossed into the growth zone at 52.2 for the month of October. The Malaysian manufacturing sector last month recorded the strongest expansion in new orders since April and the first rise in production in six months. Overall, manufacturing sector saw growth return at the start of the 4Q21 following the lifting of COVID-19 restrictions. Manufacturing conditions improved mainly due to the relaxation of COVID-19 restrictions as more states moved to phase 3 and phase 4 of the National Recovery Plan, with more manufacturing subsectors resuming operation amid rapid progress of vaccination rate. This shows that the manufacturing sector is now back on track towards recovery as severe pandemic restrictions effects subside. This also signals the positive development in Malaysia’s overall economic conditions. The domestic manufacturing sector is expected to gradually recover in the final quarter of this year and going into 2022. This is attributable to the relaxation of the COVID-19 movement restrictions on the back of vaccination progress, unleashed pent-up demand, continued support from the fiscal and financial measures, and strong external demand from major economies. Moving forward, we can expect the sector to continue improving driven by healthy global demand, the reopening of economies, strong commodity prices and steadily outperforming electrical & electronics manufacturers amidst the ongoing supply chain disruption and higher input prices.
Global manufacturing PMI little-changed at 54.3 in October
The J.P.Morgan Global Manufacturing PMI – a composite index produced by J.P.Morgan and IHS Markit in association with ISM and IFPSM – edged higher to 54.3 in October, up from 54.1 in September. However, rate of expansion in global manufacturing production was the weakest during the current 16-month upturn in October. Output growth was stymied by substantial disruption to raw material deliveries, resulting input shortages, rising cost inflation and a near-stalling of international trade flows. Production rose at a marginally quicker rate in the consumer goods sector, but decelerated slightly in the intermediate goods category. Meanwhile, the investment goods industry saw output decrease for the first time in 16 months. The level of incoming new business rose at a slower pace at the start of the final quarter, in part reflecting weaker growth in international trade volumes. Capacity at manufacturers remained under pressure despite the muted trend in demand, as highlighted by a further solid increase in backlogs of work. Rising levels of outstanding business, alongside a positive outlook for future growth of manufacturing production, led to a modest increase in employment. That said, the overall degree of business confidence dipped to a 12-month low. Global supply chains remained under severe pressure during October, with average vendor delivery times increasing to the greatest extent in the survey history. Supplier performance deteriorated to record, or near-record, extents across the consumer, intermediate and investment goods industries. The impact of supply-chain issues filtered through to price inflation during October.
Source: BIMB Securities Research - 3 Nov 2021
Created by kltrader | Aug 12, 2024
Created by kltrader | Aug 12, 2024
Created by kltrader | Aug 09, 2024
Created by kltrader | Aug 09, 2024