PETALING JAYA: March saw Malaysian manufacturers in the recovery path as operating conditions stabilised despite a moderation in production levels and new orders due to weak demand and ongoing supply chain disruption from Covid-19 pandemic.
The IHS Markit Malaysia Manufacturing Purchasing Managers’ Index (PMI) reported employment levels returned to expansionary territory for the first time in 12-months, with hopes that an end to the pandemic would give rise to a wider recovery in demand.
The PMI rose to 49.9 in March from 47.7 in the previous month, indicating a stabilisation in operating conditions as the headline index reached its highest since July 2020.
Although the survey gauges of output and new orders both rose in March, the latter notably hitting a five-month high, both remained subdued.
IHS Markit said panellists noted that order inflows continued to be dampened by the pandemic, hitting both consumer and corporate demand. Foreign demand for Malaysian manufactured goods also fell back, but at a softest pace recorded since June last year as some firms saw returning orders in Asia and the Americas.
On the other hand the index found shortages of materials and delays in receiving shipments caused average supplier lead times to lengthen to the greatest extent since May 2020.
It observed that despite a fall in inventory levels businesses remained reluctant to hold onto stocks of raw materials and finished goods in the latest survey period. Moreover, some firms also reported that supply delays had hindered restocking efforts and, in some cases, curtailed production. Backlogs of work consequently increased for the first time since August 2018, rising to the greatest extent in four years.
Despite headwinds from supply shortages and ongoing Covid-19 related issues, Malaysian manufacturers displayed a stronger degree of optimism regarding the outlook for output in the coming year.
IHS Markit observed firms recorded the highest level of positive sentiment for six months in March.
Panel members attributed the improved outlook to hopes that a recovery in both domestic and external demand would boost production levels and sales over the next 12 months.
Commenting on the latest survey results, IHS Markit chief business economist Chris Williamson said the Malaysian manufacturing sector took further welcome steps on the road to recovery in March, with rates of order book and export decline easing. While current production remains subdued, firms are gearing up for better times ahead, especially in relation to hiring.
He noted the month saw jobs being created at the fastest rate for two years as business grew more optimistic about the outlook.
“The supply of inputs continued to deteriorate, adding to manufacturers’ headwinds, but rising global trade should help alleviate some of the shortages in coming months, driving further expansion of Malaysian production and taking some of the heat out of prices.”
Source: The Sun Daily
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