Malaysia manufacturing sector deteriorated at a slower pace in June

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KUALA LUMPUR (July 2): Business conditions across Malaysia’s manufacturing sector deteriorated at a slower pace in June.

Released this morning, the headline purchasing managers’ index (PMI) registered below the neutral 50.0 threshold during June, but rose from 47.6 in May to 49.5.

“This pointed to the weakest deterioration in business conditions since March,” the statement by IHS Markit read.

Rates of contraction in output and new business both eased to the weakest since March.

On the price front, input cost inflation eased to the weakest since March 2015, whilst output charges were unchanged.

IHS Markit said that looking ahead, the Future Output Index fell to the lowest since last October, however, indicating weaker sentiment.

It said output declined further in June, but at a slower pace.

“Where a decrease was registered, panellists commented on unfavourable economic conditions,” it said.

Commenting on the Malaysian Manufacturing PMI survey data, Aashna Dodhia, Economist at IHS Markit, which compiles the survey, said: “June data indicated that manufacturing conditions in Malaysia deteriorated at the slowest pace since March, as the rates of contraction in output and new business eased to the slowest since March.

She said anecdotal evidence highlighted weak underlying demand for Malaysian goods from both domestic and international markets.

“Surprisingly, firms raised their staffing levels during June, despite a sustained period of decline in output and new orders. That said, the rate of job creation was only marginal.

“There were some reports that the abolition of the Goods and Services Tax alleviated pressure on firms’ costs burdens. Subsequently, input cost inflation moderated to the slowest since March 2015.

“Malaysian manufacturing companies retained positive forecasts for output in the next 12 months. That said, business confidence eased to the weakest since October 2017,” said Dodhia.