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KUALA LUMPUR: The IHS Markit Malaysia Manufacturing Purchasing Managers’ Index (PMI) rose to 49.1 in December 2020 from 48.4 in November 2020, indicating an improvement in the health of the country’s manufacturing sector.
The latest reading was the highest seen since August 2020, IHS Markit said in a statement today.
However, he noted that the ongoing disruption caused by the COVID-19 pandemic caused many companies to face difficulties in obtaining and receiving raw materials, resulting in longer delivery times and a sharp increase in input costs.
IHS Markit said December data suggested production and new orders remained subdued as market demand continued to be dampened by the impacts of the COVID-19 pandemic.
Foreign demand for Malaysian manufactured goods also declined, although some companies have reported returned orders from markets outside of Asia.
Although production volumes and sales moderated further in the final month of 2020, employment levels were broadly stable for the first time since May, it said.
“More positively, Malaysian goods producers reported broad stabilization in employment levels.
“Order picking going forward required additional capacity, bringing the survey’s employment rate to the highest in nine months in December,” he said.
In terms of input costs, IHS Markit said it had risen for the seventh consecutive month in December, reflecting the increase in the cost of raw materials and logistics, especially shipping costs.
“The rate of input cost inflation accelerated to the fastest in just over three years, and was strong overall,” he said, adding that manufacturers had partially passed these higher costs on to customers in the form of higher charges. by production.
Meanwhile, inventory levels fell in December 2020 as some companies were reluctant to retain pre and post production goods, while others reported that supply delays had hampered replenishment efforts, IHS Markit said.
Looking ahead, he said Malaysian manufacturers are cautiously optimistic about the production outlook for next year.
“Although businesses continued to post positive sentiment, optimism fell to the softest level since August.
“Panel members attributed the positive outlook to hopes of a recovery in both domestic and foreign demand that would boost production levels over the next 12 months,” he said.
The IHS Markit Malaysia Manufacturing PMI is compiled by IHS Markit from the responses to questionnaires sent to purchasing managers, involving around 400 manufacturers.
The indices range from 0 to 100, with a reading above 50 indicating an overall increase and below 50 an overall decrease. – Bernama
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