Manufacturing conditions worsen in April

PETALING JAYA: Operating conditions in the Malaysian manufacturing sector worsened at the sharpest pace in five months, said financial information services provider Markit.
“The start of the second quarter of 2016 showed worsening signs in the manufacturing sector. Operating conditions deteriorated to the greatest extent since last November, led by sharper declines in both new orders and production,” Markit economist Amy Brownbill said in a statement yesterday.
The headline Nikkei Malaysia Manufacturing Purchasing Managers’ Index (PMI) posted 47.1 in April, down from 48.4 in March, signaling a sharper rate of deterioration in business conditions at Malaysian manufacturers, and the latest figure was the lowest in five months.
The overall deterioration was reflected in all five components which make up the headline PMI reading.
Production at Malaysian goods producers contracted at the sharpest rate since last November, caused by a drop in demand and unstable economic conditions, and the fall in output was matched by a sharp decrease in total new orders.
According to Markit, new work intakes declined at the quickest rate since December 2015. Data suggested that a fall in domestic demand led to a further contraction in total new orders.
New export order growth eased for the second month running and was only marginal overall. Where international demand rose, firms mentioned the weak exchange rate helping to boost global competitiveness.
“Consequently, manufacturers shed some of their workers for the second time this year, suggesting firms remain uncertain towards the outlook.
“Goods producers also cut back on input buying and at the fastest rate since the survey began in July 2012,” said Brownbill.
The job cuts are a reversal from the increase seen in the previous month and although modest, the rate of job shedding was quicker than the average seen over 2016 so far.
A sharp decline in new orders led to less pressure on manufacturing capacity, as volumes of unfinished work were depleted. Markit noted that the rate of contraction was the quickest in nearly two-and-a-half years.