KUALA LUMPUR (Nov 1): Malaysia's manufacturing sector conditions remained soft in October, as firms scaled back production amid muted demand, S&P Global said on Friday.

The seasonally adjusted manufacturing purchasing managers index (PMI) was 49.5 in October, unchanged from September’s level, according to S&P Global that compiles the gauge. A reading above 50 points indicates activity expansion, while a reading below 50 points to contraction in the sector.

Still, there was a rise in new orders for the first time since June, and "firms were hopeful that the renewed increase in orders would be sustained and accelerate, leading to an eventual recovery in production levels”, Usamah Bhatti, an economist at S&P Global, commented on the latest reading.  

October’s PMI remained consistent with “modest” economic growth, continuing the trend that began in the third quarter of 2024 (3Q2024), S&P said, noting the data also suggested recent expansion signalled by official manufacturing production data had been sustained at the start of 4Q2024.

Malaysia’s economy grew 5.3% in 3Q2024 from a year earlier, according to the official flash estimate released on Oct 21, a tad slower than the 5.9% year-on-year expansion in 2Q2024.

Factory activity in Malaysia declined for the fifth straight month in October amid weak demand, even as export-oriented factories continued to hum.

“Purchasing activity was also reduced and firms left staffing levels broadly unchanged, while business confidence also softened,” S&P said.

Manufacturers surveyed by S&P appeared optimistic on the 12-month outlook for production, though “the degree of positive sentiment eased from that seen in the previous survey period”, it added.