Categories: EconomyNews

Manufacturing PMI falls to 47.9 in November

THE seasonally adjusted S&P Global Malaysia Manufacturing Purchasing Managers’ Index (PMI) slipped to 47.9 in November, down from 48.7 in October. 

In a statement last week, S&P Global Inc said the latest reading pointed to a more marked slowdown in business conditions which was the strongest since August 2021. 

The latest PMI reading is representative of approximately 5% year-on-year growth in Malaysian GDP, thereby signalling a slowdown in growth from the situation in the third quarter of 2022. 

S&P Global Market Intelligence economist Laura Denman said the Malaysian manufacturing sector displayed further signs of waning in November, according to the latest S&P Global PMI data. 

“There was a solid slowdown in production levels and the fastest scaling back in orderbook volumes since August 2021. The aforementioned fragility in demand became a running theme throughout the survey data and was reportedly the primary factor driving moderations in input buying, stocks and business confidence which, though still positive, slipped to a five-month low. 

“There were, however, some more encouraging aspects in the November data. Further signs of easing supply pressures were displayed in November, as indicated by the latest lengthening of suppliers’ delivery times being the softest in three years and only marginal overall. Meanwhile, both input cost and selling price inflation ticked up very slightly from October but remained well below the rates seen earlier in the year,” she added. 

S&P Global said in line with the headline figure, there were further signs of waning demand in November with orderbook volumes losing further momentum. 

The moderation was the sharpest in 15 months and was driven by muted underlying demand conditions. Malaysian manufacturing firms registered similar trends for international sales volumes. New export orders were scaled back for the fifth time in as many months and at a solid rate. 

Meanwhile, output moderated for the fourth month running midway through the final quarter. Survey respondents reported that drops in production levels were reflective of the aforementioned demand conditions. 

It said that muted demand conditions reportedly led firms to scale back input buying in November and at the fastest pace since September 2021. 

As such, it said that for the fourth consecutive month, pre-production inventory levels moderated. 

“The slowdown in sales also allowed firms to focus on working through outstanding business in November, thereby stretching the current sequence of backlog depletion to six months,” it explained. 

However, it said that Malaysian manufacturing companies remained hopeful that demand conditions would normalise over the coming year, as signalled by a 17th consecutive month of optimism regarding the year-ahead outlook for production. 

On the price front, it noted that the average cost burdens faced by Malaysian goods producers increased in November, largely due to rising raw material prices, though survey respondents also mentioned that exchange rate weakness exacerbated inflation. 

That said, the pace at which input prices rose was the second-slowest since November 2020. 

“Firms reportedly continued to partly share the burden of rising input costs with their clients in the form of higher selling prices. The rate of output price inflation, however, was only mild and below its historical average,” it stated. — TMR

  • This article first appeared in The Malaysian Reserve weekly print edition

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