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Malaysia: Manufacturers upbeat about outlook for 2022
KUALA LUMPUR: Malaysian manufacturers have continued to express optimism on the outlook for this year, according to the IHS Markit Malaysia Manufacturing Purchasing Managers’ Index (PMI).
While at a four-month low, positive sentiment remained robust, underpinned by hopes of a domestic and international recovery in demand as the pandemic recedes.
Usamah Bhatti, economist at IHS Markit, said: “February saw the health of the Malaysian manufacturing sector improve at a stronger pace. Despite factory production and order books moderating for the second month in a row, there was evidence that the downturn caused by the Omicron variant was short-lived and demand had gradually begun to return.”
He noted that economic growth had rebounded in the fourth quarter of 2021, and looked set to continue in this year, albeit at a softer pace.
“That said, demand conditions remained muted due to sustained supply-side constraints, with companies continually reporting widespread issues with raw material shortages and shipping delays, which continued to drive costs higher.
“Nonetheless, price pressures showed evidence of alleviating in the latest survey period, and any signs of the supply situation improving soon would be a welcome sign for goods producers reliant on global supply chains,” said Usamah.
In February, the IHS Markit Malaysia Manufacturing PMI – a composite single-figure indicator of manufacturing performance – registered 50.9 (up from 50.5 in January).
This pointed to a stronger improvement in the health of the manufacturing sector, and extended the current sequence of expansion to five months.
The latest survey reading showed a continued uplift in industrial production and gross domestic product in the opening quarter of the year, following sharp growth at the end of 2021.
The production and new order volumes moderated for the second successive month in February.
Companiess commonly attributed this to softer demand conditions as well as sustained raw material shortages, which held back client confidence and output levels.
Positively, foreign demand for Malaysian manufactured goods resumed growth for the second time in three months.
Moreover, the expansion was the quickest in 10 months amid stronger demand in the United States and parts of Asia.
Firms often commented that additional purchases were made in light of sustained difficulties in sourcing and receiving raw materials.
Delivery times extended to the greatest extent for 10 months, which encouraged firms to raise holdings of pre-production inventories.
Material shortages also contributed to a further increase in input prices in February.
That said, while the rate of input price inflation remained robust, cost burdens rose at the softest pace since last September.
Anecdotal evidence suggested that higher raw material and freight costs contributed to higher prices.
Concurrently, firms sought to partially pass higher costs on to customers, as evidenced by a sustained rise in input prices.
In line with the trend for input costs, factory gate charges were raised at a softer rate.
Employment levels fell marginally, mainly due to firms reporting a lack of available workers, notably from abroad.
Source: https://www.thestar.com.my/business/business-news/2022/03/02/manufacturers-upbeat-about-outlook-for-2022