KUALA LUMPUR: The seasonally adjusted S&P Global Malaysia Manufacturing PMI posted 49.9 in June, broadly in line with the neutral 50.0 mark.
S&P Global Market Intelligence reported that the latest figure presented a less positive picture compared to May, when operating conditions improved slightly, with the PMI recording 50.2.
The average reading for the second quarter of the year was the highest since the third quarter of 2022, thus boding well for an improvement in economic growth over the quarter.
S&P said the data also suggested that the recent solid expansion signalled by official manufacturing production data has been sustained beyond April.
"June was largely a month of stability for Malaysian manufacturers, following on from the growth seen in May. Encouragingly, firms were again able to bring in greater volumes of new work, but there were still some reports of demand remaining muted. As such, manufacturers were happy to keep their output and employment levels unchanged,” economics director Andrew Harker said in a statement.
“Cost inflation was also stable, although firms were more willing to raise their own selling prices than has been the case for some time.
"Taking the second quarter as a whole, the PMI data have represented an improvement relative to the opening part of the year, boding well for upcoming official data prints,” he added.
S&P said new orders increased for the second consecutive month in June, but reports from panellists that demand remained muted meant that the rate of expansion was only fractional and softer than that seen in May.
The increase in overall new business in part reflected sustained growth of new export orders, which rose for the third month running. Firms reported higher new orders from customers in a range of Asia Pacific destinations, including Australia, the Philippines and Vietnam.
It noted that manufacturers also showed little appetite to hold extra items in stock at the midway point of the year. Purchasing activity, stocks of inputs and post-production inventories were all scaled back during June.
Higher raw material costs and unfavourable exchange rate fluctuations resulted in a further increase in input prices. The rate of inflation was solid and unchanged from that seen in May.
While the pace of cost inflation was stable, S&P said the rate at which firms increased their own selling prices quickened and was the fastest since September 2022.
“New order growth is expected to be sustained over the coming year, supporting optimism regarding the outlook for manufacturing production. That said, sentiment dropped for the fifth consecutive month in June and was the lowest since August 2023,” it said.
