KUALA LUMPUR (April 2): Malaysia’s manufacturing conditions moderated slightly in March as new orders eased the most in a year and production fell, latest data showed.

The seasonally-adjusted manufacturing purchasing managers index (PMI) was 48.8 in March, down from 49.7 in February, according to S&P Global that compiles the gauge. A reading above 50 points indicates activity expansion, while a reading below 50 signals contraction in the sector.

"Malaysian manufacturers remained under pressure at the end of the first quarter of 2025,” Usamah Bhatti, an economist at S&P Global, commented on the latest reading. “Confidence waned compared to the previous month with the level of optimism reaching its lowest point in just over one-and-a-half years.”

The first quarter of 2025 nevertheless will see continued economic expansion, S&P noted.

Bank Negara Malaysia recently maintained its forecast for the economy to expand steadily between 4.5% and 5.5% for 2025 even as external headwinds intensify amid international trade tensions.

Malaysia will release its advance estimates for gross domestic product for the first quarter on April 18 followed by the full, second estimate in May.

As new orders deteriorated and production softened in March, manufacturers reduced employment and also noted the non-replacement of voluntary leavers, S&P Global said. Purchasing activity, stocks of inputs and inventories of finished goods were all scaled back during March.

However, firms surveyed by S&P Global pinned their hopes on an improvement in market demand though the overall level of confidence was the weakest since August 2023, amid concerns over timing of any demand recovery.