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Malaysia PMI October 2021

Malaysia: Manufacturing PMI returns to expansionary territory in October

The manufacturing Purchasing Managers’ Index (PMI), produced by IHS Markit, rose to 52.2 in October from 48.1 in September, logging the best reading in six months. As a result, the index climbed above the 50-threshold that separates improving from deteriorating conditions in the manufacturing sector compared to the previous month.

October’s upturn was largely attributed to a marked increase in new orders and expanding output, thanks to the easing of Covid-19 restrictions. Moreover, new export orders fell at a softer pace than in the previous month amid higher demand in the U.S. and Europe. Less positively, firms reduced staffing levels again, resulting in a notable rise in backlogs of work.

On the inflation front, higher costs for raw materials and transportation led to a pickup in input cost inflation, which prompted firms to raise their selling prices in a bid to protect margins.

Commenting on October’s result, Chris Williamson, chief business economist at IHS Markit, warned:

“While looser virus containment measures are helping drive demand higher, supply has yet to catch up, with companies again reporting widespread issues with component shortages, shipping delays and a lack of containers, all of which colluded to drive prices up at an increased rate in October. Supply and demand clearly remain out of balance, and will do so for some time to come, acting as a constraint on growth and putting upward pressure on prices.”

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