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Malaysia's business condition in manufacturing sector remains challenging

Last update: 01/10/2019
KUALA LUMPUR, Oct 1 -- Business condition in Malaysia's manufacturing sector remained challenging in September despite the four-month high purchasing managers’ index (PMI) of 47.9 last month versus the 47.4 recorded in August.

At the current level, the PMI is broadly indicative of annual gross domestic product growth of between 4.5 per cent and five per cent, according to historical comparisons, IHS Markit Ltd said in a statement today.

“The survey's output index picked up slightly in September but held close to the levels seen across the third quarter, indicating a stable production trend.

“Analysis of comparable historical official data on Malaysian manufacturing suggests that at the current level, the survey’s output index is consistent with annual production growth of just over four per cent,” it said.

The global information provider noted that panel comments cited new product developments and resilient customer demand as key reasons supporting output volumes and the newly-produced items were held in stock in some cases, as firms prepared in advance for client demand for these products.

Meanwhile, demand conditions also showed some signs of stabilisation in September.

Survey data had pointed to an increasingly tough environment in recent months, but improved sales to existing customers reportedly contributed to a rise in the new orders index.

Nevertheless, challenges remained apparent as clients held out for price discounts amid strong competitive pressures.

External demand also remained fragile, with orders from key export markets dropping.

Meanwhile, current and future workloads were deemed sufficient to hold employment steady during September.

The Future Output Index was consistent with a relatively strong level of confidence, highlighting that businesses expect production volumes to be higher than present levels over the coming 12 months.

According to firms, forecasts of greater demand from domestic and external clients, as well as the planned development of new products drove the positive outlook.


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