● The headline manufacturing PMI rose for the third straight month to 49.5 (Oct: 49.3) in November to a 14-month high though it remained below the 50 neutral level
- Improvement is driven by an increase in new orders and output indices alongside steady employment amid challenging external environment.
● Output index rose close to October's one year high
- Mainly supported by improved demand from export orders, reflecting a net rise for the first time in four months.
● New export orders increased on improved demand
- Improvement in export demand came from key overseas market namely the Middle East, Asia-Pacific regions, and the US.
● High business optimism, while employment levels were broadly stable
- Future expectations index is above average for the year-to-date signalling better outlook going forward.
- Backlogs of work declined underpinned by sufficient operating capacities as employment levels remained stable.
● Input cost grew at a slower pace on lacklustre inflationary pressures
- Mainly attributed to currency weakness and to remain competitive, forcing output charges unchanged from the preceding month.
● Mixed manufacturing performance across regions
- Eurozone (PMI: 46.9; Oct: 45.9): improving but remained below neutral level for the tenth successive month attributable to a decline in output and new orders.
- US (flash: 52.2; Oct: 51.3): expand at a more robust pace in November, marking its third successive gain.
- China (51.8; Oct: 51.7): strongest expansion since 2017 partly helped by easing trade tensions following development on the phase-one trade deal.
● We reiterate our cautious outlook for the manufacturing sector
- Though there have been some positive developments surrounding the US-China trade feud, the impact of existing tariffs on global trade and growth persists in the immediate term.
- The negative spillovers towards domestic activities are expected to weigh on GDP growth for this year to 4.5% in 2019 (2018: 4.7%).
Source: Kenanga Research - 3 Dec 2019