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Malaysia PMI September 2019

Malaysia: Manufacturing PMI increases for first time in five months in September

The manufacturing Purchasing Managers’ Index (PMI), produced by IHS Markit, rose to 47.9 in September from 47.4 in August. Nevertheless, the headline reading remained below the neutral 50-threshold that separates contraction from expansion in the manufacturing sector. Moreover, according to IHS Markit, complete survey data for the third quarter suggests that growth likely slowed from Q2’s pick-up, but maintained a respectable pace of between 4.5-5.0% in Q3.

The slight improvement in September was driven by modest increases in the output and new orders indices, although both remained in contractionary territory. Panelists noted new product developments and sustained customer demand supported production in the month, while higher sales to existing customers propped up new business. That said, anecdotes suggest clients held back for price discounts, and foreign demand fell in the month. Subdued demand prompted manufacturers to work through backlogs for the thirteenth month running. On a brighter note, employers held staff levels steady in September, likely in part due to sustained optimism for production over the next twelve months on expectations of increase demand and new product launches.

In terms of prices, although input price inflation weakened in September, goods producers continued to face strong cost pressures, whereas output charges were largely unchanged over September.

Commenting on September’s print, Chris Williamson, chief business economist at IHS Markit, noted:

“With global headwinds intensifying, it’s no surprise to see Malaysia’s manufacturers continuing to struggle in September, but there are at least some encouraging signs of upward momentum being regained.”

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