by ASILA JALIL / pic by ARIF KARTONO
MALAYSIAN manufacturing activity continued to improve for the third straight month, with the Manufacturing Purchasing Managers’ Index (PMI) reaching a 14-month high of 49.5 in November versus 49.3 in October.
“The principal driver behind this rise was an increase in new export orders for the first time in four months,” IHS Markit, which compiles the PMI, said in a statement yesterday.
The November figure, while only marginally higher than the previous month, is the highest reading recorded since September 2018 and above its historical average.
Despite being below the neutral 50 level, the current PMI reading is broadly indicative of annual GDP growth of over 5%.
“Generating lift in the headline PMI was survey data on orderbook inflows, with the respective new business index rising for a third straight month to hit a 14-month high,” IHS Markit said.
Survey respondents noted that demand from several key overseas markets had improved during November, generating a net rise in new export orders for the first time in four months.
Key sources of orderbook strength were the Middle East and Asia-Pacific regions, as well as higher sales in the US.
The survey also found that additional support on the demand side has led to increasing numbers of firms bolstering their output volumes during November, providing further evidence that the production soft patch bottomed out back in June.
November’s survey brought further signs of manufacturing growth picking up momentum, IHS Markit chief business economist Chris Williamson said.
The headline PMI, which measures overall business condition, has risen for three successive months to reach its highest for over a year, while the survey’s production gauge continued to rise from the lows seen at mid-year.
Both the headline index and the survey’s output gauge are running at levels indicative of GDP and manufacturing production growing at annual rates above 5%, Williamson added.
“Orderbooks are benefitting 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,” he said.
Given Malaysia’s export focus, whether these expectations turn into reality will likely depend on the outcome of global trade tensions, but prospects are looking brighter at the moment, he said.
On the jobs front, manufacturing employment levels were held broadly stable in November.
While several firms recorded a loss of headcount through voluntary resignation, this was offset by hiring activity at other companies.
The survey also highlighted that expectations of stronger demand and successful contract tenders underpinned ongoing optimism regarding production in the year ahead at local goods producers.
There was little inflationary pressure in the country’s manufacturing sector due to the fractional pace in the rise of input prices in November, which firms primarily attributed to currency weakness.