Malaysia: Manufacturing conditions worsen on marked fall in new business in October
November 1, 2018
The manufacturing Purchasing Managers’ Index (PMI), produced by Nikkei and IHS Markit, dropped from 51.5 in September to 49.2 in October. The reading came in below the crucial 50-point mark that separates expansion from contraction in the manufacturing sector.
The deterioration came on the back of a strong decrease in new domestic orders, with anecdotal evidence suggesting that this resulted from the implementation of the sales and services tax (SST) on 1 September. Moreover, output declined for the first time since June, and backlogs of work moderated. However, employment continued to increase in anticipation of projects that are currently in the pipeline.
The depreciation of the ringgit, rising raw material prices and the implementation of the SST drove cost pressures. Input price inflation was the steepest in nearly a year and output prices increased as a result.
Malaysia Fixed Investment Forecast
FocusEconomics Consensus Forecast panelists see fixed investment rising 3.5% in 2019, which is unchanged from last month’s estimate. For 2020, the panel expects fixed investment to increase 3.7%.
Author: Jan Lammersen, Economist