KUALA LUMPUR (Oct 1): Malaysia's manufacturing sector conditions eased further in September as productions moderated with tepid new order growth, S&P Global said on Tuesday.

The seasonally-adjusted Manufacturing Purchasing Managers’ Index (PMI) dipped to 49.5 in September from 49.7 in August, according S&P Global that compiles the gauge. A reading above 50 points indicates activity expansion while below 50 points to contraction in the sector.

The data indicated that economic growth in the third quarter “continued at a similar trajectory to that seen in the second quarter,” said Usamah Bhatti, an economist at S&P Global. "Sentiment stayed positive, with firms expecting higher output in the coming year.”

Malaysia’s economy accelerated and grew 5.9% in the second quarter from a year earlier thanks to stronger household spending, business investments and exports.

Factory activity in Malaysia declined for the fourth straight month in September amid weak demand even as export-oriented factories continued to hum with activity.

While total output declined since May, new export orders rose for the sixth successive month amid reports of stronger demand across Southeast Asia.

S&P noted that firms surveyed cited weak client confidence due to domestic economic weakness, but mentioned that demand from overseas remained positive.

Sentiment of manufacturers, meanwhile, was positive with hopes of better demand conditions underpinning predictions of output growth in the year ahead as the level of confidence strengthened to the highest since the start of the year, S&P added.

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