KUALA LUMPUR: The latest data has signalled further downbeat trends across the Malaysian manufacturing sector at the start of the second quarter of 2024, according to S&P Global Market Intelligence.
While demand remained generally subdued, S&P said there were slight indications that firms were on an upward trajectory as they scaled back production at a softer rate amid a slower reduction in new order inflows.
Moreover, employment levels stabilised in April, ending a three-month sequence of job shedding.
On the price front, input price inflation was little-changed on the month and contributed to a renewed increase in output prices, although the rate of charge inflation was only marginal.
The seasonally adjusted S&P Global Malaysia Manufacturing Purchasing Managers' Index (PMI) rose to 49.0 in April, up from 48.4 in March to indicate a softer downturn in the Malaysian manufacturing sector.
The latest PMI data suggest that gross domestic product growth is running at a slightly improved rate than that seen at the end of 2023, as well as pointing to modest year-on-year improvements in official manufacturing production data.
"Manufacturers often noted that demand in the sector remained muted during April, with reports of weak customer confidence.
"Total new business moderated for the 20th consecutive month, though the rate of reduction eased from March. Demand conditions in international markets meanwhile improved for the first time in a year and at the strongest rate since April 2021," it said.
With customer demand remaining broadly subdued, manufacturers scaled back production for the twenty-first month in a row.
"That said, the moderation eased from March and was only mild. At the same time, stocks of finished goods were wound down further, as firms used existing stocks to fulfil orders."
S&P added that as market conditions showed some signs of recovery, Malaysian manufacturers reported stable employment levels in April, following three consecutive monthly falls.
Usamah Bhatti, economist at S&P, said despite the latest PMI data suggesting that demand conditions in the Malaysian manufacturing sector remained muted at the start of the second quarter of 2024, the data appear to be on the up and are still consistent with modest growth in the official statistics.
"Evidence is currently pointing to demand conditions moving on an upward trajectory, given the softer moderations in production, new business and purchasing.
"Better still, manufacturers will be buoyed by the renewed expansion in new export sales, with the rate of growth the strongest recorded in three years."
Bhatti added that the outlook towards output over the coming year also remained positive in April. However, the overall degree of confidence waned to the lowest for eight months.
"Firms often mentioned that they remained unsure regarding the timing and speed of any demand recovery, with downside risks centred around a muted global economy," Bhatti said.