Malaysia’s manufacturing Purchasing Managers’ Index (PMI) declined to 46.5 in January 2023 from 47.8 in the previous month, which “reflected the moderation of the sector,” according to S&P Global.
S&P Global Market Intelligence Economist, Usamah Bhatti said there were further signals that the economic situation in Malaysia in January was still not encouraging due to the challenging situation in the manufacturing sector which limited demand and production in Malaysian manufacturing companies.
The latest PMI data still shows growth in official data into the new year, albeit at a slower pace.
However, two positive aspects emerged from the latest survey results. First, employment recorded new expansion thus helping companies to remain in control of workloads and setting the basis for expanding output in the future should demand begin to regain momentum.
“The second is to reduce delivery times for the first time in over three years due to material shortages, port congestion and delivery issues returning to normal,” according to Bhatti in a research note today.
S&P Global said the latest reading of the PMI showed that manufacturing output and gross domestic product (GDP) growth, which recorded a gradual slowdown at the end of 2022, remained so into the new year.
According to him, the weaker overall figure is, among other things, due to stronger moderation in terms of output volume.
S&P Global said the overall figure was the most significant seen since August 2021 as manufacturers witnessed weak demand and customer confidence in domestic and international markets.
“Accordingly, export demand for Malaysian manufactured goods continues to decline and at a sharp rate since June 2021,” he said.
Although the demand situation is moderate, S&P Global said, the supply chain was able to record an improvement for Malaysian goods producers due to reduced delivery times for the first time since November 2019.
On the price front, input costs rose for the 32nd month in January even as inflation rates continued to decline and slow as companies recorded lower prices for various inputs including oil.
“Looking ahead, manufacturers in Malaysia are increasingly optimistic about output prospects next year amid expectations that domestic and overseas demand will improve as the global economy recovers,” he said.
