KUALA LUMPUR (Oct 2): Economists remain upbeat about Malaysia’s manufacturing conditions despite a slight contraction in September’s Purchasing Managers’ Index (PMI), supported by stable domestic demand and stimulus measures from China-Malaysia’s largest trading partner.
S&P Global, which compiles the surveys, reported that Malaysia’s seasonally adjusted manufacturing PMI dipped to 49.5 in September, from 49.7 in August. A reading above 50 indicates expansion in manufacturing activity, while below 50 signals contraction.
With the reading was close to the neutral level of 50, indicating stability, Kenanga Investment Bank (Kenanga IB) expressed optimism that the overall health of manufacturing conditions will gain momentum in the coming months.
This positive outlook is backed by the expected impact of the upcoming 2025 Budget, rising tourist arrivals, and increasing demand from Southeast Asia.
“Notably, China’s latest stimulus measures, including efforts to revive its property market, should also serve as a positive catalyst for Malaysia’s export-oriented manufacturing sector,” Kenanga IB noted, while cautioning that downside risks persist due to geopolitical tensions and renewed US-China trade issues.
BIMB Securities echoed this sentiment, saying recovery prospects look promising, driven by stable domestic demand, modest export gains, and a global semiconductor recovery.
Malaysia’s electrical and electronics (E&E) products saw an 8.2% growth in July, compared with 7.1% in June, along with an 18.7% increase in global semiconductor sales.
“We are cautiously optimistic that the manufacturing sector will regain traction towards the end of the year. Growth is expected to remain steady, mainly driven by the technology upcycle and China’s stimulus measures,” BIMB added.
Meanwhile, TA Securities noted that the average PMI for the third quarter (3Q2024) was 49.6, showing only a slight decline compared to 49.7 in 2Q2024.
“Looking ahead, sentiment in Malaysia’s manufacturing sector remained positive at the end of the third quarter,” the research house added, noting that confidence reached its highest level this year, with expectations of increased demand and output growth.