Malaysia: Manufacturing PMI drops to over one-year low in December
The S&P Global Manufacturing Purchasing Managers’ Index (PMI) came in at 47.8 in December, down marginally from November’s 47.9. December’s result marked the weakest reading since August 2021. Consequently, the index fell further below the 50.0 no-change threshold, signaling a sharper deterioration in manufacturing sector operating conditions compared to the previous month. The PMI thus averaged 48.1 in Q4, which was estimated to be indicative of about 5.0% annual GDP growth in the final quarter of 2022, down notably from the 14.2% recorded in the third quarter.
The manufacturing sector continued to struggle at the end of 2022 due to muted domestic and foreign demand. This resulted in fewer new orders and a steeper drop in output compared to November. Consequently, firms scaled back their purchasing activity and registered the second monthly fall in employment levels in the quarter.
More positively, Malaysian firms benefited from spare capacity and cleared order backlogs at one of the sharpest rates in the index’s history. Moreover, subdued demand eased the pressure on supply chains, with supplier performance stabilizing in December. On the cost front, production prices rose at the softest pace in 31 months, which allowed firms to decrease selling prices. Lastly, output expectations over the upcoming 12 months remained optimistic amid hopes for an uptick in demand in the new year.