The seasonally adjusted S&P Global Malaysia Manufacturing Purchasing Managers’ Index (PMI) stood at 47.8 in December last year, slipping from 47.9 in November to mark a fourth consecutive softening of operating conditions across the Malaysian manufacturing sector.
S&P Global said in a note on Tuesday that Malaysia’s manufacturing sector continued to face challenging business conditions in the final month of 2022 as muted demand leads to further moderation of Malaysia’s manufacturing.
Averaging 48.1 over the final quarter of 2022, the PMI represents an approximately 5 percent year-on-year growth of gross domestic product (GDP) in Malaysia, indicating some loss of momentum from the situation in the third quarter.
S&P Global Market Intelligence economist Laura Denman said with muted customer demand remaining a key theme within December’s PMI data, Malaysia’s manufacturing sector registered a further loss in momentum in the final month of last year.
According to Denman, the moderation in order book volumes, though slightly softer than in November, remained stronger than the average for 2022 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,” she said.
However, with demand subdued, she notes that supplier performance has been able to recover somewhat with December data marking no-change in delivery time from the month prior.
Latest survey data was also indicative of an easing in cost pressures.
According to the economist, input costs rose at the slowest pace in the current 31-month sequence of inflation, and prices charged by Malaysian manufacturing firms fell for the first time since May 2020.