Malaysia’s manufacturing sector showed signs of stabilization in February, with the seasonally adjusted S&P Global Malaysia Manufacturing Purchasing Managers’ Index (PMI) rising to 49.7, up from 48.7 in January. This marks the highest reading since August 2024, suggesting that business conditions are gradually improving.
According to S&P Global Market Intelligence economist Usamah Bhatti, the latest data indicates positive trends, though overall conditions remain challenging.
“Firms secured higher volumes of new work for the first time in four months, but demand remained subdued,” Bhatti stated. “As a result, production and employment saw only marginal reductions.”
Cost inflation remained relatively stable compared to historical averages and showed little change from January. This allowed manufacturers to reduce selling prices for the second consecutive month.
S&P Global noted that the PMI figures align with modest gross domestic product (GDP) growth expectations for the first quarter of 2025, following the expansion observed in late 2024.
New orders increased for the first time since October 2024, recording the fastest growth since May of the same year. Some businesses reported stronger demand, although overall client confidence remained weak. The data also indicated that domestic sales contributed to the rise in overall new business, while export orders declined for the third consecutive month, particularly in the Asia-Pacific region.
Despite the rise in new orders, production levels declined for the ninth consecutive month, though at a slower rate. Backlogs of work continued to decrease, marking the seventh consecutive month of decline, with the sharpest reduction recorded since March 2024.
Malaysian manufacturers remained cautious about stockpiling, though the pace of inventory reductions slowed in February. Input sourcing also showed slight improvement with minimal delays.
S&P Global further reported that raw material costs and exchange rate fluctuations contributed to higher input prices. However, inflation remained moderate, and selling prices were lowered slightly for the second month in a row.
Looking ahead, manufacturers expressed optimism about sustained new order growth over the next 12 months, supporting expectations for a gradual recovery in production. Business confidence improved, reaching its highest level in four months.
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