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KUALA LUMPUR, April 22 —Malaysia’s Business Conditions Index (BCI) increased by 28.8 points year-on-year (y-o-y) to 111.8 points in the first quarter ended March 2021 (Q1 2021), indicating that manufacturers had regained their confidence since the outbreak of the COVID-19 in Q1 2020.
The Malaysian Institute of Economic Research (MIER) said the expansionary mode was also partly driven by the recovery in the domestic and global economy, the launch of the National COVID-19 Immunisation Programme, and the provision of the economic stimulus packages to manufacturers.
On a quarter-on-quarter (q-o-q) basis, MIER said the BCI slipped 3.6 points to 111.8 points, attributed to the decline in sales following the drop in domestic and external orders, as well as the falling production due to lower demand from local and foreign sources.
“Despite the deterioration in the index, business sentiments were above the threshold level (of 100 points) for two consecutive quarters,” it said in its Business Conditions Survey Report for Q1 2021 released today.
MIER noted that the manufacturing sales component sub-index of the BCI fell by 4.85 points q-o-q to 54.5 points but improved 8.3 points y-o-y, suggesting that manufacturing sales had regained momentum.
On domestic orders, the report showed the sub-index decreased 18.4 points q-o-q to 47.7 points but was 6.0 points higher than the previous year.
In terms of export orders, it said the sub-index shrank 3.2 points q-o-q to 57.5 points but improved 11.3 points on a y-o-y basis.
MIER said Capital Investment Index increased 3.7 points q-o-q to 67.5 in Q1 2021 and rose substantially by 21.3 points y-o-y, indicating that investment spending had recovered.
According to the report, employment conditions had improved substantially q-o-q, with 32 per cent of firms reporting that their workforce has expanded compared to 28 per cent in the previous quarter.
It said only four per cent of employers reported cutbacks in employment in Q1 2021, a substantial decline of 27 per cent q-o-q.
Wage costs also increased slightly in Q1 2021 as 36 per cent of the respondents from 1,000 business organisations reported a rise in wages, compared to 31 per cent in the preceding quarter.
“Domestic selling prices remained stable, with 73 per cent of the manufacturers reporting unchanged prices in Q1 2021,” it added.
Looking ahead, MIER said business conditions are expected to increase in the next three months, supported by the stronger Expected Index (EI) which rose 10.7 points q-o-q to 120.6 points in Q1 2021.
It attributed the upward movement in the EI to the strong expected production, which improved 4.0 points from the previous quarter, as well as better expected export sales which climbed 6.7 points from Q2 2020.