Malaysia: Manufacturing PMI spirals to record low in April amid Covid-19 pandemic
The manufacturing Purchasing Managers’ Index (PMI), produced by IHS Markit, plummeted to 31.3 in April from 48.4 in March, representing the lowest result in the history of the survey, which began in 2012. Consequently, the index fell further below the 50-threshold, signaling a significant deterioration in operating conditions over the prior month.
The recession in the manufacturing sector deepened at the outset of the second quarter as the pandemic severely restricted demand and caused producers to operate below capacity. New orders shrank markedly and export sales fell at a record rate in the month, with measures to contain the virus both domestically and globally hurting new business. Moreover, output plunged at an unparalleled rate due to anemic demand and factory suspensions. Consequently, employment fell modestly in the month, although a large majority of producers reported unchanged staff levels. Supply-side metrics worsened in April, with supplier delivery times lengthening to the greatest extent in survey history as the movement control order constricted transportation and material shortages increased due to factory closures.
In terms of prices, input cost pressures were deflationary in April as prices for raw materials and other inputs declined. Manufacturers, subsequently, lowered output prices at the quickest rate in over five years in a bid to revive demand.
On a brighter note, business confidence returned to positive territory as more companies expect a rebound in activity within the next 12 months. That said, uncertainty over the pandemic remained elevated nonetheless.
Commenting on the outlook, Chris Williamson, chief business economist at IHS Markit, noted:
“It was reassuring to see only a modest fall in employment, as the vast majority of firms held on to staff to safeguard longer term production capacity. Business expectations for the year ahead also ticked higher, as more companies saw prospects improve. In that respect, with increasing numbers of governments looking at ways to ease COVID-19 restrictions, it’s likely that we will soon see the rate of export decline moderate, helping drive a recovery in production. A recovery is nevertheless likely to be sluggish, as global demand looks set to remain relatively subdued for some time.”