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Malaysia PMI June 2021

Malaysia: Manufacturing PMI plunges to over-year low in June due to tightened Covid-19 restrictions

The manufacturing Purchasing Managers’ Index (PMI), produced by IHS Markit, plunged to 39.9 in June, well-below May’s 51.3, logging the lowest reading in 14 months. As a result, the index dived below the 50-threshold that separates deteriorating from improving conditions in the manufacturing sector, compared to the previous month.

June’s tumble was largely attributed to deteriorating new business and output, as the tightening of domestic Covid-19 curbs, weighed on client demand. Similarly, new exports orders also contracted but did so at a softer pace than domestic ones. Against this backdrop, firms shed staffing levels, while manufacturers turned pessimistic for the first time in over a year, expressing concerns regarding the pandemic’s duration.

On the price front, despite somewhat easing, input cost inflation continued to accelerate for the 13th successive month, amid elevated raw material costs. As a result, firms tried to pass on costs to customers, but only partially.

Chris Williamson, chief business economist at IHS Markit, warned:

“The concern is that future output expectations have slumped, falling to the lowest since the survey began almost ten years ago, as companies grew more concerned about the potential impact of further virus waves. If such low confidence persists, companies may grow increasingly reluctant to hold on to staff, and will instead move further towards focusing on cost reduction.”

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