Malaysia: Manufacturing PMI largely unchanged in July
August 1, 2019
The manufacturing Purchasing Managers’ Index (PMI), produced by IHS Markit and Nikkei, was virtually unchanged at 47.6 in July (June: 47.8). The headline reading thus remained below the neutral 50-point mark indicating tougher operating conditions.
July’s reading came amid weak demand, which led firms to trim staff levels in July. More positively, output declined at a slower pace, while exports rose for the first time since April. On the price front, input price inflation eased, while output prices ticked up only marginally. Moreover, business optimism dipped from June’s over five-year high, but remained upbeat nonetheless.
Commenting on July’s print, Chris Williamson, chief business economist at IHS Markit, noted:
“the survey data remain broadly indicative of both GDP and manufacturing output growing at annual rates of 4.5% […] Moreover, the positive net balance of companies expecting output to continue to rise over the coming year is an encouraging sign of resilience in the face of the global headwinds”.
Looking ahead, the Central Bank’s decision to add monetary stimulus in May and elevated optimism among firms should support manufacturing activity in the second half of the year. The future of trade talks between the U.S. and China will be a key factor to watch.
Author: Steven Burke, Economist