KUALA LUMPUR (May 2): The Nikkei Malaysia Manufacturing Purchasing Managers' Index (PMI) breached the 50-point level for the first time since March 2015, thanks to improved demand for the country's exports.

The PMI recorded an improvement to 50.7 in April compared with 49.5 in March.

While it only signals a marginal growth in the sector, it is the first net improvement in the health of the manufacturing sector in more than two years.

IHS Markit's report said the growth is underpinned by a solid gain in new export orders, as foreign demand for goods produced in Malaysia strengthened and helped to offset ongoing weakness from domestic-based clients.

"April's survey marked a somewhat positive turnaround for Malaysian manufacturing economy, with output and new orders rising concurrently for the first time in over two years. Growth is being underpinned by strengthened sales from abroad, which has helped to offset ongoing domestic demand weakness," IHS Markit senior economist Paul Smith said.

While output volume continued to rise for third successive month during April, growth was modest, improving only slightly since March. The increase in production was attributed to a combination of new project start-ups as well as higher demand and new orders.

"Although only marginal, April's survey snapped a 25-month run of falling new business, amid reports of strengthened demand from abroad," the report said.

New export orders rose at a solid pace that was the best since July 2014, with notable sources of new sales success coming from China, Europe, Japan and the Middle East.

With output rising at a slightly faster rate than new business over the month, manufacturers were able to make inroads into their backlogs of work outstanding.

Despite improvement in new orders and production, April's survey showed there was little change in employment numbers compared to the previous month.

"A number of firms commented on difficulties and delays in the recruitment of foreign workers," it said.

During the survey, there were again reports that adverse currency movements had raised the price of raw materials and where possible, Malaysian manufacturers sought to pass on their increased costs to clients through a rise in average output charges.

"Average input prices subsequently rose sharply in April, with the rate of inflation remaining historically high," IHS Markit added.

Nonetheless, April's strengthening of new orders and production has helped to underpin ongoing confidence that growth will be sustained over the coming 12 months, the report wrote.