KUALA LUMPUR (Jan 2): Malaysia’s manufacturing sector experienced muted trends at the end of 2024, as indicated by a decline in the Purchasing Managers’ Index (PMI) to 48.6 in December, according to S&P Global on Thursday.
This figure highlights a slowdown in the industry, with production and new orders experiencing more pronounced moderations compared to previous months.
"The final round of PMI data for 2024 suggested that demand conditions in the Malaysian manufacturing sector remained subdued during December, as production and new order inflows moderated at modest rates.
"That said, the data are still consistent with the GDP growth seen in the third quarter of the year continuing, albeit at a softer pace," said S&P Global Market Intelligence economist Usamah Bhatti.
In response to the lack of new orders, manufacturers scaled back purchasing activities and wound down inventories of both raw materials and finished goods, S&P Global’s statement read.
Notably, the depletion of outstanding business reached its strongest point in eight months, as companies focused on completing existing orders rather than seeking new ones.
A positive development was the sharp slowdown in input price inflation, which was the weakest in a 55-month sequence of rising costs.
This decline contributed to only a fractional increase in output charges, easing overall cost pressures on manufacturers.
Despite these challenges, GDP growth continued, albeit at a slower rate. However, weak customer confidence persisted throughout December, with total new business moderating slightly for the second consecutive month. International demand conditions also deteriorated for the first time since March, further impacting the sector.
Production was scaled back for the seventh consecutive month, with December witnessing the most pronounced moderation of the year.
As a result, employment levels saw a marginal decline for the third month in a row. Companies reported having sufficient capacity, as the level of outstanding business fell significantly, marking the largest decrease since April.
In line with trends in new orders and production, purchasing activity was modestly reduced.
Although stocks of purchases decreased, the rate of reduction was softer compared to November. December also saw a deterioration in vendor performance, with delivery times lengthening slightly due to port congestion.
Looking ahead, there is optimism that new orders will return to growth, supporting confidence that production will increase over the coming year.
The overall degree of optimism remained solid, consistent with levels seen in November.