KUALA LUMPUR (April 2): The headline Nikkei Malaysia Manufacturing Purchasing Managers’ (PMI) – a composite single-figure indicator of manufacturing performance – fell from 49.9 in February to 49.5 in March, said the Nikkei Malaysia Manufacturing Purchasing Managers’ Index (PMI).

A PMI of more than 50 points represents expansion in the manufacturing sector, while that below 50 indicates contraction.

IHS Markit, which compiles the survey, today said this was consistent with a marginal deterioration in operating conditions.

It said the latest figure was broadly in line with the long-run series average (49.4) since July 2012.

IHS Markit said central to the downward movement in the headline PMI was a fall in manufacturing production for the first time in eight months.

“Panellists widely associated falls in output with lower order book volumes. That said, the rate of contraction was marginal.

“The poor performance in the sector was also driven by a decline in new business placed at Malaysian manufacturing firms,” it said.

IHS Markit said weak underlying demand was the key factor behind lower volumes of new work, citing panellists.

However, it said the rate of contraction was only marginal overall.

Aashna Dodhia, Economist at IHS Markit, said Malaysia’s manufacturing sector ended Q1 2018 on a slightly weaker footing, with output declining for the first time in eight months amid reports of poor demand conditions.

“Moreover, the New Export Orders Index registered at a 15-month low, highlighting falling demand for Malaysian goods from international markets.

“Price pressures continued to escalate, with both input and output prices rising at faster rates. However, firms’ margins remained under pressure as they continued to face limited pricing power.

“Business sentiment eased to the weakest since last December, reflecting some concerns towards the 12-month outlook for output. A downbeat mood was also reflected with jobs growth slowing to the weakest in the current period of staff recruitment,” said Dodhia.