PETALING JAYA: There is reason to be optimistic for the outlook of domestic manufacturing as the purchasing managers’ index (PMI), an indicator of the sector’s future business conditions, is expected to continue expanding at a sustained pace despite sentiment easing slightly from the previous survey period.
TA Research said in a report that the latest PMI reading aligns with modest growth as measured by gross domestic product statistics, extending the trend observed since the third quarter.
“The data also indicates that the recent expansion signalled by official manufacturing production data has been sustained at the start of the final quarter,” the research house said.
It added that the average PMI reading over the last 10 months of the year remained resilient reflecting sustained improvement in manufacturing sector growth.
“Looking ahead, new-order growth is expected to continue over the coming year, bolstering optimism about the 12-month outlook for manufacturing production,” the research house said
It ws referring to the improvement seen in average PMI for the 10 months of 2024 at 49.4 compared with the average of 47.7 in the same period last year of as well as last year’s average of 47.8.
It noted that firms surveyed by S&P Global reported a renewed increase in new orders while the input-price rises eased slightly in October.
The seasonally adjusted S&P Global Malaysia Manufacturing PMI held steady at 49.5 even though the sector continued to experience a slowdown in October and business conditions were subdued while production volumes were scaled back more significantly compared with September.
“During the surveyed period, new orders rose for the first time since June.
“However, reports from panellists indicated that demand remained subdued, meaning the overall rate of expansion was minimal.
“The increase in new business was partly driven by sustained growth in new export orders, which rose for the seventh consecutive month.
“Firms noted higher order intakes from customers across the Asia-Pacific region, including Australia, the Philippines, and Vietnam,” the research house said.
“Despite the expansion in order books, production levels at Malaysian manufacturers were scaled back for the fifth month in a row.
“The rate of moderation was the most pronounced since March as firms continued to highlight that general demand conditions were subdued.
“Purchasing activity, input stocks, and post-production inventories were all reduced at a faster rate in October, with input buying declining at its sharpest pace in a year.
“Firms also reported challenges in sourcing inputs, as delivery times lengthened for the sixth consecutive month,” the research house said.
