KUALA LUMPUR (Sept 1): The Nikkei Malaysia Manufacturing Purchasing Managers Index (PMI) dropped to 47.2 in August, from 47.7 a month earlier, indicating the strongest deterioration in operating conditions in nearly three years.

In a statement today, Nikkei Inc said Malaysian manufacturers had contended with less orders and costlier production inputs in August.

“New orders contracted at the fastest rate since September 2012, leading to further sharp falls in both production and purchasing activity. Subsequently, employment decreased for the third straight month, albeit at a weaker rate.

“Cost pressures persisted, as input prices rose at the quickest rate since November 2013, consequently leading to higher charges,” said Nikkei.

Nikkei said input price inflation was the strongest since November 2013, attributed to higher taxes and the depreciation of the ringgit against the US dollar. A weaker ringgit resulted in costlier raw materials for manufacturers here, according to Nikkei.

The Nikkei Malaysia Manufacturing PMI is a composite single-figure indicator of manufacturing performance. Data is derived from indicators for new orders, output, employment, suppliers’ delivery times and purchases.

A figure greater than 50 indicates improvement of the manufacturing sector.

Malaysia's August factory activity fell in tandem with China's manufacturing sector.
 
Today, Reuters reported activity in China's manufacturing sector contracted at its fastest pace in three years in August, an official survey showed on Tuesday, reinforcing fears of a sharper slowdown in the world's second-largest economy, despite a flurry of government support measures.

China's official PMI fell to 49.7 in August, from the previous month's reading of 50.0, in line with expectations of analysts polled by Reuters.