Thailand
Malaysia’s manufacturing PMI at 48.5 in October
PETALING JAYA: The headline IHS Markit Malaysia Manufacturing Purchasing Managers’ Index (PMI) dipped for the fourth successive month in October as rising Covid-19 case numbers and renewed restrictions to try to prevent its spread stymied the manufacturing sector’s recovery.
IHS Markit said the composite single-figure indicator of manufacturing performance fell to 48.5 from 49.0 in September.
“Both output and new orders slowed to greater extents than seen in the previous month and business optimism waned, ” the research firm said in a statement yesterday.
IHS Markit said the latest reading signalled a modest deterioration in the health of the sector, albeit one that was much less marked than seen at the height of the pandemic.
It said while the historical relationship between the PMI and official data suggests that gross domestic product continued to rise at the start of the fourth quarter of the year, manufacturing output looked to be stagnating amid a resurgence of Covid-19 cases.
The extension and reintroduction of restrictions to prevent the spread of Covid-19, was reportedly a key factor behind worsening market demand and a scaling back of production, IHS Markit said.
On another note, the research firm highlighted that weaker new order inflows meant that firms were able to deplete their backlogs of work, resulting in the sharpest reduction in outstanding business since December 2018.
A lack of pressure on capacity resulted in a further fall in employment, although the rate of job cuts continued to soften from August’s survey record, it said.
IHS Markit said firms also expressed a reluctance to raise purchasing and hold inventories amid the fragile demand environment; therefore, stocks of both purchases and finished goods were consequently depleted during October.
Despite falling demand for inputs, manufacturers continued to report supply chain delays, whereby suppliers’ delivery times lengthened solidly again at the start of the fourth quarter amid Covid-19 restrictions both in Malaysia and abroad, it said.
“Shortages of materials contributed to an increase in input costs, although the pace of inflation ticked down and was weaker than the series average.
“The rate of output price inflation also softened, and was only marginal, as efforts to pass on higher input costs to customers were undermined by the offering of discounts to try to secure new orders. Charges have risen modestly during the past five months, ” it said.
It added that although manufacturers remained confident that output would increase over the coming year, optimism fell sharply from September’s nine-month high amid rising Covid-19 case numbers and the extension of restrictions. — Bernama
Source: https://www.thestar.com.my/business/business-news/2020/11/03/malaysias-manufacturing-pmi-at-485-in-october