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Malaysia PMI August 2021

Malaysia: Manufacturing PMI edges up in August, remains entrenched in negative terrain

The manufacturing Purchasing Managers’ Index (PMI) produced by IHS Markit, rose to 43.4 in August, above July’s 40.1. However, the index remained stubbornly below the 50-threshold that separates deteriorating from improving conditions in the manufacturing sector, compared to the previous month.

August’s improvement was largely driven by softer contractions in output and new orders, which both declined at the weakest rates in three months. According to anecdotal evidence, rising numbers of Covid-19 infections abroad weighed on foreign demand, while mounting inflationary pressures shook confidence domestically, prompting clients to freeze projects. Against this backdrop, employment levels declined once again, albeit at a marginal pace, while manufacturers expressed stronger optimism over output in the coming 12 months.

On the price front, albeit softening over the prior month, input cost inflation remained elevated largely due to higher costs for raw materials and transportation. This prompted firms to pass the burden on to their clients, but only partially.

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