Manufacturing sector weakens for 4th month in a row

KUALA LUMPUR: The Malaysian manufacturing sector began 2019 with a deterioration in operating conditions for the fourth month in a row, with both output and new businesses declining in January.

The headline Nikkei Malaysia Manufacturing Purchasing Managers’ Index – a composite single-figure indicator of manufacturing performance – registered 47.9 in January, up from 46.8 in December, extending the current period of contraction to four months.

Export sales also declined, while easing demand pressures enabled firms to reduce backlogs of work.

“Although there was a marginal up-tick in employment, costs were cut elsewhere as input buying decreased and stocks were scaled back,” IHS Market said in a statement today.

Elsewhere, it added that survey data indicated falling purchasing prices, enabling firms to raise their own prices more slowly.

“Looking ahead, companies were optimistic that output would be higher in 12 months,” said IHS Markit, adding that new business inflows were also declining for the fourth month.

“Although demand weakened in January at a softer pace than in December, the decline was strong overall. Panellists reported that economic conditions had been unfavourable.

“Export sales also fell in the latest survey period, with softer demand arising from China, Japan and South Korea,” it said.

Output was reduced, but the rate of contraction eased since December, in line with lower production requirements.

Stocks of manufactured goods were reportedly used to clear outstanding orders. Backlogs of work fell in January, albeit to the softest extent since last September.