S&P Global: Malaysia's PMI at three-month low amid sharper moderation in new orders
KUALA LUMPUR, April 1 — Malaysian manufacturing sector saw a further moderation in March as demand conditions remained muted according to the latest report from S&P Global Market Intelligence released today.
The financial analytics firm said slowdowns were more pronounced for new orders, output, and employment, while business confidence reached a seven-month low.
It said the seasonally adjusted S&P Global Malaysia Manufacturing Purchasing Managers’ Index (PMI) eased from 49.5 in February to 48.4 in March.
The reading signalled a slight moderation in the health of the sector.
“Malaysian manufacturers remained under pressure in March, as the latest PMI data signalled that the sector sank slightly deeper into moderation, following positive signs at the start of 2024.
“New orders, output and employment were all scaled back to a greater extent, and at the most pronounced rates in the year-to-date,” Usamah Bhatti, economist at S&P Global Market Intelligence, said in a statement accompanying the report.
He said the muted demand environment allowed for supplier improvement as delivery times shortened to the greatest extent in ten months.
“Meanwhile, despite another slight pick-up in input price inflation, prices charged for Malaysian manufactured goods were unchanged as some firms lowered output prices in an attempt to stimulate sales.
“Firms remained hopeful of an eventual improvement over the coming year, though concerns were raised about how long the current demand weakness would persist for. As a result, business optimism faltered to a seven-month low,” he added.
The firm also said new orders eased for the nineteenth month running in March amid weak demand.
It said the reduction quickened from that seen in February and was the most pronounced in 2024 so far.
“Muted demand was also reported in international markets, where sales moderated for an eleventh consecutive month.
“In line with the picture for new orders, production softened to the greatest extent in three months, with the rate of reduction solid overall.
“Concurrently, employment was scaled back for the third consecutive month in March.
“While the rate of job shedding was only marginal, it was the steepest seen in four months as firms reduced headcounts in line with capacity requirements,” the report read.
The firm also said that purchasing activity, stocks of inputs and inventories of finished goods were all scaled back at the end of the first quarter, with only stocks of purchases seeing the rate of moderation ease on the month.
“That said, firms saw shorter delivery times for the second time in three months during March. The rate of improvement was only marginal, yet the most marked seen since May 2023 amid less pressure on suppliers given the muted demand environment.
“The rate of input cost inflation ticked up to a three-month high amid currency weakness and higher prices for raw materials globally. The rate of inflation remained softer than the series average, however.
“On the other hand, prices charged for manufactured goods were unchanged from February, ending a seven-month sequence of inflation,” the firm said in the report.
The firm said hopes of a stronger improvement in demand were key to optimism regarding the 12-month outlook for output at the end of the first quarter.
