● 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