Firms enter 2020 on solid footing

​Malaysia’s manufacturing sector is heading into 2020 on a firm footing, with survey data for December showing further momentum gains in output and new orders, said IHS Markit

Malaysia’s manufacturing sector is heading into 2020 on a firm footing, with survey data for December showing further momentum gains in output and new orders, said IHS Markit.

Production, IHS Markit noted, had expanded at the fastest pace since September 2018 amid reports of stronger demand pressures.

“Malaysia’s manufacturers move into 2020 reporting increasingly brighter business conditions, having ended 2019 with their best performance for over a year,” said IHS Markit chief business economist Chris Williamson in a statement today.

“Survey indicators of output and order book inflows moved higher as recent headwinds to demand showed further signs of

easing, in turn helping boost optimism about the year ahead to one of the highest seen over the past six years,” he added.

The headline IHS Markit Malaysia Manufacturing Purchasing Managers’ Index (PMI), a composite single-figure indicator of manufacturing performance, increased to a 15-month high in December of 50.0, from 49.5 in November.

The current PMI reading is indicative of annual gross domestic product growth of about 5.5 per cent.

IHS Markit said for the fourth quarter as a whole, the headline PMI had recorded its highest average since the third quarter of 2018, suggesting that economic growth had accelerated into the year-end.

The latest survey data pointed to the fastest increase in goods production since September 2018.

“Analysis of comparable historical official data on Malaysian manufacturing suggests that, at current levels, the survey’s output index is consistent with production growth of six per cent. According to anecdotal reasons, production volumes were supported by improved demand conditions.”

The firm added that the trend in new orders had continued to pick up during December, with the respective index rising for the fourth straight month to its highest in over a year.

Successful project tenders and greater sales to existing clients were mentioned by survey respondents. Nevertheless, weakness across international markets remained.

“Whether expectations of faster growth in 2020 materialise will likely depend on global trade developments and ongoing uncertainty in relation to trade wars, meaning firms continue to focus on keeping costs low,” Williamson said.

“But any further improvements in the news flow regarding trade will hopefully spur faster growth and boost risk appetite

in 2020 after what has been the weakest PMI performance for three years in 2019, matching a similar slowdown in the global economy,” he added.

Source: NST

Posted on : 03 January 2020
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Last Updated : Thursday 21st May 2020