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KUALA LUMPUR (Jan 4): Malaysia’s Purchasing Managers Index (PMI) rose to 49.1 in December, from 48.4 in November, the highest since reading 49.3 in August, IHS Markit said. .
In a statement today, it said the rise in the single-digit composite indicator of manufacturing performance demonstrated a further improvement in the health of the manufacturing sector.
“Malaysian manufacturers signaled a renewed path to stable operating conditions in the final month of 2020. Although production volumes and sales further moderated, employment levels remained broadly stable for the first time since May. However, The ongoing disruption caused by the 2019 coronavirus disease (The Covid-19 pandemic) presented difficulties in obtaining and receiving raw materials, resulting in longer delivery times and a sharp increase in the cost of supplies faced by Malaysian manufacturing companies, “said IHS Market.
He added that based on the historical relationship between the PMI and official statistics, the December figures showed annual growth in both industrial production and gross domestic product (GDP). However, the survey also clearly indicated that the Covid-19 pandemic continued to affect the economy.
“Data for December suggested that production and new orders remained subdued. The respective rates of moderation were generally similar to those seen in November, as market demand continued to be subdued by the impact of the Covid-19 pandemic. Foreign demand for Malaysian manufactured goods also fell backward, albeit with the pace of decline slowing, as some companies reported returning orders from markets outside of Asia.
“More positively, Malaysian goods producers signaled broad stabilization in employment levels. Future order picking required additional capacity, bringing the survey’s employment index to the highest in nine months in December.
IHS Markit noted that the additional staff requirement also signaled increasing pressure on operating capacity, with the backlog in December falling to the lowest level since June.
Meanwhile, the cost of inputs rose for the seventh consecutive month, reflecting higher prices for raw materials and logistics costs, particularly shipping costs.
“The rate of input cost inflation accelerated to the fastest rate in just over three years, and was strong overall. Manufacturers partially passed these higher costs on to customers in the form of higher production fees, which they increased at the fastest rate in 32 months, “he added. He said.
Supplier delivery times increased the most since May due to shortages of raw materials and delays in receiving shipments, while inventory levels decreased.
According to IHS Markit, some companies were reluctant to keep pre and post production products during the latest survey period, while others said that restocking efforts were hampered by a delay in supplies.
“Looking ahead, Malaysian manufacturers were cautiously optimistic about the production outlook for next year. While companies continued to post positive sentiment, optimism declined to the softest level since August. Panel members attributed the decline. positive outlook to the hopes of a recovery both in the domestic market and in foreign demand that would boost production levels over the next 12 months, “he said.
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