Malaysia’s factory activity slowed further in October amid renewed decline in order volumes though manufacturers grew more optimistic of better demand ahead.
The seasonally-adjusted manufacturing purchasing managers index (PMI) was 49.5 in October versus 49.8 in September, according to S&P Global that compiles the gauge. A reading above 50 points indicates activity expansion, while a reading below 50 signals contraction in the sector.
“Firms recorded renewed reduction in new orders, which contributed to a sustained scaling back of production volumes,” said Usamah Bhatti, an economist at S&P Global. “Muted conditions also fed into firms' decisions on employment and stock holdings, all of which moderated during October.”
While the index has fallen to a four-month low, the latest reading still suggests that the broader economy expanded “solidly” on an annual basis at the start of the final quarter of the year, S&P Global noted.
Malaysia’s economy expanded faster than expected in the third quarter, as domestic demand, its main growth engine, continued to hum while exports chugged on. Official flash estimates point to gross domestic product rising 5.2% in July-September, when compared to the same quarter last year.
The government expects the economy to grow between 4.0% and 4.8% in 2025.
S&P Global observed that the 12-month outlook among respondents “improved sharply” in October, with the overall degree of optimism the most marked since April 2023, as firms were confident that new orders would expand.
“Concurrently, firms chose to absorb a strengthening of cost pressures by reducing output charges for the first time in six months, in an attempt to boost demand,” Bhatti added.
Source: theedgemalaysia