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Malaysia PMI March 2019

Malaysia: Manufacturing conditions continue to worsen in March

The downturn in Malaysia’s manufacturing sector worsened in March, with the manufacturing Purchasing Managers’ Index (PMI) dropping to 47.2 from 47.6 in February. As a result, the index, produced by IHS Markit and Nikkei, moved further south of the neutral 50-point mark indicating tougher operating conditions.

March’s drop in the headline figure came on the back of falling output and new orders, with both indicators affected by tougher overseas demand dynamics. New orders particularly reflected softer demand from regional trading partners, while export orders from Germany and Japan picked up. Backlogs of work, meanwhile, were reduced in part due to softer demand conditions while employment gains in the sector remained broadly stable; increased payrolls at some firms were offset by staff shedding at other businesses. Inflationary pressures were relatively unchanged in the month, with both output and input prices remaining stable.

Looking ahead, firms’ optimism regarding the year ahead improved on better sales forecasts, new projects and products as well as new contract tenders. Moreover, Chris Williamson, chief business economist at IHS Markit, noted that “the survey is still broadly indicative of the economy growing at an annual rate of 4%–4.5%.” Headwinds stemming from the external environment remained a cause of concern, however, Williamson added.

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