KUALA LUMPUR (Nov 1): The Nikkei Malaysia Manufacturing Purchasing Managers’ Index (PMI) fell to 47.2 in October this year, from 48.6 in September, as new orders dropped.

In a statement today, IHS Markit said the drop in new orders led to lower production of goods in the country. The Nikkei Malaysia Manufacturing PMI is derived from indicators on new orders, output, employment, suppliers’ delivery times and stocks of purchases.

A figure above 50 indicates improvement in the manufacturing sector. Nikkei is the sponsor of the Nikkei Malaysia Manufacturing PMI.

IHS Markit said: "Contributing to the overall decline in manufacturing conditions, production decreased for the nineteenth consecutive month. Moreover, the rate of contraction was sharper than the historical average. According to panellists, challenging economic conditions and a fall in demand led to a drop in output.

"New orders decreased at the sharpest rate in 11 months during October. Firms linked a fall in total sales to uncertainty in the market. Data also suggested that a decline in international demand contributed to the overall decrease in incoming new orders," IHS Markit said.

As a result, IHS Markit said manufacturers cut input buying at the quickest rate since June.

Subsequently, IHS Markit said inventory of pre-production items were depleted at the sharpest pace in 14 months.

"Due to a sharp fall in new orders, firms were able to clear levels of unfinished work for the first time in four months during October. Suppliers were also able to meet delivery schedules, as lead times shortened for the tenth successive month.

"Meanwhile, input prices rose at the slowest rate in 15 months. This enabled manufacturers to lower their charges for the first time since January 2015," IHS Markit said.