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Malaysia’s manufacturing continues to moderate, PMI eases to 47.8 in December 2022 – S&P Global
KUALA LUMPUR: Malaysia’s manufacturing sector continued to face challenging business conditions in December 2022, with the manufacturing purchasing managers’ index (PMI) easing to 47.8 against 47.9 in November, S&P Global said.
“This marked a fourth consecutive softening of operating conditions across the Malaysian manufacturing sector,” it said in a statement.
The latest moderation, though broadly in line with that seen in November, was the strongest since August 2021, the research firm added.
S&P Global Market Intelligence economist Laura Denman said muted customer demand, which contributed to sustained moderations in output and order books, remained a key theme within December’s PMI data.
She said the moderation in order book volumes, though slightly softer than in November, remained stronger than the average for the year as a whole which subsequently led firms to scale back production at a solid pace.
“Forward-looking indicators suggested that firms were anticipating conditions to remain challenging in the coming months as signalled by a further trimming in input buying, reductions in inventory levels, and a relatively weak outlook on output over the next year.
“However, with demand subdued, supplier performance has been able to recover somewhat with December data marking no-change in delivery time from the month prior – following a three-year sequence where delivery times have lengthened on a monthly basis,” she said.
S&P Global said averaging 48.1 over the final quarter of the year, the PMI was representative of about 5.0 per cent year-on-year growth of Malaysia’s gross domestic product, thereby representing some loss of momentum from the situation in the third quarter.
Despite the scaling back in output, there was evidence of spare capacity within the Malaysian manufacturing sector and firms continued to clear backlogs of work, thereby extending the current sequence of moderation to seven months.
“Manufacturers were confident of a rise in production over the coming 12 months, with some firms hopeful that market conditions would improve in the new year.
“That said, concerns over the potential for demand conditions to remain muted in 2023 meant that business sentiment remained relatively subdued in December, posting below the historical average,” S&P Global said.
The December PMI data also showed that new orders and foreign demand both moderated in December, stretching the current sequences of reduction to four and six months, respectively, it said.
Cost and supply pressures showed easing momentum in December, with vendor performance stabilising during the month, ending a three-year sequence of deterioration, while firms cut their selling prices for the first time since May 2020. – Bernama