Malaysia: Manufacturing PMI deteriorates on weak demand dynamics in April
May 2, 2018
Manufacturing activity in Malaysia started the second quarter on a weak note. The manufacturing Purchasing Managers’ Index (PMI), produced by IHS Markit, deteriorated for the third consecutive month. It dropped from 49.5 in March to 48.6 in April, the lowest reading since October 2017. The PMI therefore moved further south of the 50-point threshold separating expansion from contraction in business activity in the manufacturing sector.
The downturn was driven by stronger declines in new orders and output. New orders contracted at the quickest pace since last July due to weaker demand, while foreign demand also weakened as new export orders contracted. Feeble sales drove output to decline and led backlogs of work decrease slightly. Meanwhile, purchasing activity fell for the fifth consecutive month due to weak demand conditions. On the positive side, business sentiment remained elevated at the highest level in four and a half years, with firms expecting sales to improve. Due to high sentiment among manufacturers, employment continued to grow in the sector.
Looking at prices, inflationary pressures remained elevated, with input prices rising for the 39th consecutive month in April. Higher input costs were passed onto consumers as output prices rose for the 18th consecutive month, at the quickest rate since September of last year.
Malaysia Fixed Invesment Forecast
FocusEconomics Consensus Forecast panelists see fixed investment rising 5.7% in 2018, which is unchanged from last month’s estimate. For 2019, the panel expects fixed investment to increase 6.3%.
Author: Jan Lammersen, Economist