KUALA LUMPUR (Oct 24): Malaysia's manufacturing capacity utilisation remained firm in the third quarter of 2025 (3Q2025), likely holding near the previous quarter's 82.5% level, said BIMB Securities in a note on Friday.
This strength was supported by resilient domestic demand and a surge in export frontloading ahead of US tariff deadlines.
"However, the sustainability of this strength is uncertain, as renewed US-China trade frictions and potential product-specific tariff expansion could weigh on external demand and disrupt supply chain flows in the coming quarters," it added.
However, the outlook for 4Q2025 points to a modest easing, with capacity utilisation expected to drift lower to around 81.5%-82.0%, said BIMB.
This anticipated softening is due to fading frontloading effects and potential disruptions from ongoing US-China trade tensions.
Despite this, domestic-oriented industries are projected to provide a buffer, supported by strong household incomes and infrastructure spending.
Overall, while a mild cooling is expected, Malaysia's manufacturing sector is positioned to remain resilient through year end.
"Export momentum may taper as firms adjust to new tariff structures and slower order flows, particularly in price-sensitive and low-margin segments.
BIMB noted that Malaysia’s manufacturing capacity utilisation rose to 82.5% in 2Q2025.
The higher utilisation reflected an improved industrial momentum and stronger productivity among firms, it said.
Citing the Department of Statistics Malaysia, BIMB said the rate gained an improvement of utilisation rate of 0.4% increase year-on-year from 82.1% in 2Q2024.
BIMB said the stronger utilisation was largely driven by frontloading of US export orders, especially in May and June, particularly in the electronics, machinery and furniture segments.
DOSM data also showed that capacity utilisation in export-oriented industries rose 0.3% year-on-year to 81.6% (81.3% in 2Q2024), reflecting stable domestic demand and gradual recovery in export-oriented industries.