KUALA LUMPUR: The seasonally adjusted S&P Global Malaysia manufacturing purchasing managers’ index (PMI) was 49.5 in February, up from 49.0 in January.
"The latest S&P Global Malaysia Manufacturing PMI suggests that firms began to see demand conditions turn a corner during February. There were only slight moderations in output, total new orders and exports as
firms mentioned pockets of demand building up in the manufacturing sector,” S&P Global Market Intelligence economist Usamah Bhatti said.
"Further encouragement came from a broad stabilisation in backlogs of work, a sign that capacity pressures were also starting to build. At the same time, employment levels were broadly unchanged, as efforts to reduce costs by lowering headcounts were offset by the hiring of new full-time staff.
"There were indications of a pick-up in cost inflation in February, but it was far removed from the pace recorded in the three years following the COVID-19 pandemic. In fact, firms raised their selling prices only slightly over the month, amid reports that some manufacturers reduced charges in an attempt to stimulate sales,” he added.
According to S&P Global, the latest survey data pointed to a further scaling back of manufacturing output, the nineteenth in as many months.
That said, the pace at which production eased was mild and the softest since August 2022. Respondents largely attributed the latest easing of output to weak demand conditions, though some firms mentioned that some areas of demand had showed signs of recovery.
S&P Global said this was consistent with softer moderations of total new orders and new export business. Both reduced at a slight pace in February that were the softest in the respective 18- and ten-month sequences.
It noted that weak demand had led to some reluctance among clients to commit to new projects, though other panel members noted a slight improvement in customer confidence.
Meanwhile, softer reductions in production and demand allowed for a gradual stabilisation in purchasing activity as some companies mentioned increasing input buying to match output requirements.
Concurrently, Malaysian manufacturers opted to further run down inventories of purchases and finished goods.
Manufacturing firms noted a renewed lengthening in delivery times in February. Where longer lead times were mentioned, they were often attributed to port congestion and the disruption to shipping in the Red Sea.
In addition, the rate of input cost inflation strengthened for the first time in three months in February. The latest increase was softer than the series average and much weaker than the trend seen over the past three years, however. Higher operating expenses reflected increased raw material costs and currency weakness.
It said optimism regarding the year-ahead outlook for output eased to a six-month low in February. Confidence was supported by hopes that the demand environment would improve and price conditions would stabilise.
