Malaysia’s PMI hits 14-month high in November

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KUALA LUMPUR (Dec 2): Malaysia's manufacturing sector continued to show signs of the goods-producing economy moving along an upward trajectory in November.

According to IHS Markit, Malaysian manufacturing activity, as measured by the Manufacturing Purchasing Managers' Index (PMI), rose for a third successive month to reach a 14-month high.

The index increased to 49.5 in November, a marginal rise from 49.3 in October, but the highest reading since September 2018 and above its historical average.

"Although below the neutral 50 level, the current PMI reading is broadly indicative of annual gross domestic product (GDP) growth of over 5%.

"Generating lift in the headline PMI were survey data on order book inflows, with the respective new business index rising for a third straight month to hit a 14-month high," said IHS Markit.

It said on the jobs front, manufacturing employment levels were held broadly stable in November.

"While a number of firms reported a loss of headcount via voluntary resignations, this was offset by hiring activity at other companies," it said.

IHS Markit said expectations of stronger demand and successful contract tenders meanwhile underpinned ongoing optimism regarding production in the year ahead at Malaysian goods producers.

It said the future expectations index is still running slightly above its average for the year to date and well above the level seen this time last year.

IHS Markit chief business economist Chris Williamson said November's survey brought further signs of manufacturing growth picking up momentum.

He said the headline PMI, which measures overall business conditions, has now risen for three successive months to reach its highest for over a year, and the survey's production gauge has continued to rise from the low seen at mid-year.

"Both the headline PMI and the survey's output gauge are now running at levels indicative of GDP and manufacturing production growing at annual rates above 5%.

"Order books are benefiting from renewed export growth fuelled by improving global trade flows and an easing in global trade tensions.

"Firms are expecting the improving trend to continue as we head towards the year-end, with the survey's future output expectations index running well above the lows seen this time last year. Given Malaysia's export focus, whether these expectations turn into reality will likely depend on the twists and turns in global trade wars, but at the moment the news is looking brighter," he said.