PMI worsens in October. Malaysia’s Manufacturing Purchasing Managers’ Index (PMI) plunged to 48.6 points, its sharpest contraction in three months. This marked the continued deterioration in the PMI after a stagnant reading of 49.9 in September following August’s transitory recovery to 50.4, just above the neutral 50.0 threshold.
Contraction in new orders amid a fractional growth in output. The sharper contraction in new orders (also its worst decline in three months) was a drag on the PMI despite the fractional increase in output.
Weak new orders weighing against purchasing; employment. Weak new orders, in turn, discouraged firms from input buying, hence lower inventory accumulation. At the time, weak new orders have now translated into a reduction in payroll numbers, its first in four months and at its sharpest level since August 2016.
Cost pressures ease but strong inflationary pressure remains. Markit notes that easing cost pressures marks a potential silver lining in October’s otherwise bleak PMI outlook. Both input costs and output costs rose by a slower rate.
Subdued short-term outlook; cautious medium term outlook. We are cautious of the medium-term manufacturing prospects, demand given weak new orders. With export orders moving to the downside, we see some downside risks to Malaysia’s growth trajectory amid slower growth of both domestic and external demand factors.
Source: Kenanga Research - 2 Nov 2017
Created by kiasutrader | Aug 26, 2024
Created by kiasutrader | Aug 26, 2024
hstha
It is likely to be a temporal drop. Nothing to worry about.
2017-11-02 09:57