Malaysia: Manufacturing sector conditions improve for the first time in seven months in August
September 3, 2018
For the first time in seven months, the manufacturing Purchasing Managers’ Index (PMI), produced by Nikkei and IHS Markit, breached the 50-point threshold separating expansion from contraction, as business conditions improved in August. The index increased to 51.2 in August from 49.7 in July.
August’s result was driven by a pick up in output amid new orders growth, which expanded for the first time in seven months. Although demand dynamics improved, anecdotal evidence suggests that a portion of the new orders was placed to circumvent the sales and services tax that took effect on 1 September. Stronger underlying demand also supported an increase in output, which increased for the second consecutive month and at the fastest pace since November of last year. Backlogs of work also rose on the back of stronger demand, which led firms to hire more staff for the third month in a row.
Inflationary pressures eased in August, but input prices increased due to the currency depreciation. Subsequently, output prices rose for the second consecutive month. Looking ahead, business sentiment will likely improve this year thanks to an expected improvement in demand levels.
Malaysia Fixed Investment Forecast
FocusEconomics Consensus Forecast panelists see fixed investment rising 3.4% in 2018, which is down 0.5 percentage points from last month’s estimate. For 2019, the panel expects fixed investment to increase 4.6%.
Author: Jan Lammersen, Economist