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Manufacturing sector picks up slightly in second half of 2020 — FMM-MIER survey

Manufacturing sector picks up slightly in second half of 2020 — FMM-MIER survey

02 Mar 2021

KUALA LUMPUR — The Malaysian manufacturing sector activity picked up slightly and cautiously in the second half of 2020 (2H2020) after experiencing a slow 1H2020, according to the latest FMM-MIER Business Conditions Survey.

The bi-annual collaboration survey between the Federation of Malaysian Manufacturers (FMM) and the Malaysian Institute of Economic Research (MIER) showed that most indicators registered readings below the 100-point threshold level of optimism, an indication that overall business conditions in 2H2020 remained subdued, FMM said in a statement on Tuesday.

“Manufacturers’ outlook for their businesses in early 2021 is equally cautious. Except for cost of production and employment which are expected to trend up, the outlook for local and export sales, production, capacity utilisation and capital investment is cool going forward,” it said.

The survey, which drew 652 respondents nationwide, was conducted from December 23, 2020 to January 31, 2021, and tracked business confidence via the FMM-MIER Business Conditions Index (FMM BCI) covering the actual performance in 2H2020 and outlook for 1H2021.

The survey also revealed that the resurgence of Covid-19 cases in the last quarter of 2020 has continued to pose challenges for both the government and businesses.

“With constraints on mobility and demand going forward, respondents are cautious on their business projections for 1H2021, as reflected in the latest forward-looking indicators of the survey.

“While most of these indicators have improved from the previous period, their persistent stay below the optimism threshold is an implication that cautiousness among manufacturers has continued to prevail in their business outlook for the next six months,” it said.

The survey also found that the expected index for business activity rose to 87, and with its reading below the optimism threshold, implying that respondents are cautiously hopeful of a pick up in their businesses soon.

According to the survey, 23 per cent of the respondents replied positively, while 41 per cent did not foresee any change in the coming months.

“The prognosis for local and export sales for 1H2021 is equally subdued. Registering below the optimism threshold, both the expected indexes for local sales and export sales stood at 74 and 88, respectively, reflecting once again, cautiousness on the part of the respondents.

“Favourable replies from 14 per cent respondents of those who sell locally and 24 per cent of those who export indicate that export sales are expected to perform better than local sales in 1H2021. The indexes for expected production volume and capacity utilisation are also below the optimism threshold,” it added.

Source: Bernama

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