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Malaysia manufacturing PMI hits 4-month high in Dec 2020

Malaysia manufacturing PMI hits 4-month high in Dec 2020

04 Jan 2021

The headline IHS Markit Malaysia Manufacturing purchasing managers’ index (PMI) rose to 49.1 last month from 48.4 in November 2020, indicating an improvement in the country’s manufacturing sector.

In a statement today, IHS Markit said the reading was the highest seen since August 2020.

However, it noted that the ongoing disruption caused by the Covid-19 pandemic saw many companies facing difficulties in sourcing and receiving raw materials, resulting in longer delivery times and a sharp increase in input costs.

IHS Markit said data last month suggested that output and new orders remained subdued as market demand continued to be dampened by impacts caused by the pandemic.

Foreign demand for Malaysian manufactured goods also declined, although some firms have reported returning orders from markets outside Asia.

It said although production volumes and sales moderated further in the final month of 2020, employment levels were broadly stable for the first time since May.

“More positively, Malaysian goods producers signalled a broad stabilisation in employment levels.

“Preparation for orders in the future requires additional capacity, pushing the survey’s employment index to the highest for nine months in December.”

In terms of input costs, IHS Markit said it had increased for the seventh consecutive month in December, reflecting the rising cost of raw materials and logistics, most notably shipping costs.

“The rate of input cost inflation accelerated to the fastest in just over three years, and was sharp overall,” it said, adding that manufacturers had partially passed these higher costs through to clients in the form of higher output charges.

However, IHS Markit sai, inventory levels fell last month, as some businesses were reluctant to hold onto pre- and post-production goods, while others reported that supply delays had hindered efforts at restocking.

Looking ahead, it said Malaysian manufacturers are cautiously optimistic regarding the outlook for output in the coming year.

“Although firms continue to record positive sentiment, optimism eased to the softest since August.

“Panel members attributed the positive outlook to hopes of a recovery in both domestic and external demand that will boost production levels over the next 12 months.”

The IHS Markit Malaysia Manufacturing PMI is compiled by IHS Markit from responses to questionnaires sent to purchasing managers, involving around 400 manufacturers.

The indices vary between 0 and 100, and a reading of above 50 indicates an overall increase, and below 50 an overall decrease.

Source: Bernama

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