Malaysia July PMI stands at 48.1

PETALING JAYA: Manufacturing conditions in Malaysia worsened at the weakest pace since March at the start of the third quarter of 2016, while production contracted at the softest rate in six months, helped by a slower fall in new orders.
The headline Nikkei Malaysia Manufacturing Purchasing Managers’ Index (PMI) posted at 48.1 in July, up from 47.1 in June, signalling a weaker rate of deterioration in operating conditions in Malaysia.
The headline PMI is a composite single-figure indicator of manufacturing performance derived from indicators for new orders, output, employment, suppliers’ delivery times and stocks of purchases. Any figure greater than 50.0 indicates overall improvement of sector operating conditions.
The latest reading was the highest since March. This reflected softer declines in output, new orders and stocks of purchases.
Commenting on the Malaysian Manufacturing PMI survey data, Amy Brownbill, economist at Markit, which compiles the survey, said operating conditions in Malaysia worsened at a slower rate at the start of the third quarter of 2016, helped by slower contractions in both production and new orders.
“However, manufacturers cut back on their workforce for the first time since April, suggesting companies are less optimistic towards the outlook. Buying activity was also scaled back and at an historically marked pace.
“Meanwhile, cost inflationary pressures eased for the first time in four months, helping goods producers to improve their profit margins. As a result, manufacturers increased their charges at a weaker rate,” Brownbill said in a statement.
Contributing to the overall decline in manufacturing conditions was a contraction in output. However, the rate of decrease eased to the weakest since January. Where output fell, panellists mentioned a lack of new sales.
Similarly, total new orders declined at the softest rate since March and one that was slower than the average over the current 17-month sequence of contraction. This was partially helped by a weaker decrease in international demand, as new export orders declined at a slower rate than June’s 43-month record.
Despite subdued demand, volumes of unfinished work were accumulated for the first time in six months. Moreover, the rate of increase was the sharpest since last November. Data suggested, that due to a recent fall in employment, extra pressure was placed on manufacturing capacities.
For the first time since April, manufacturers cut back on staffing numbers in July. According to reports, surveyed companies wanted to save on costs which led to a reduction in hiring. However, the rate of decline was only marginal overall.
Resulting from falls in new orders, buying activity was scaled back. The rate of decline eased since June, but was still sharper than the average over the current 14-month period of contraction.
On the price front, cost inflationary pressures eased to the weakest since March. Moreover, the rate of increase was slower than the average over the current 18-month sequence of inflation. Where input prices rose, firms mentioned greater raw material costs stemming from unfavourable exchange rates and the increase in sales tax.
Prices charged also rose at a softer pace, which was among the weakest in the current 17-month period of charge inflation.