Manufacturing sector gains traction in Q4
IHS Markit Ltd, a U.S.-based provider of key information, analysis and solutions, said Malaysian manufacturing began to receive attention in the early part of the fourth quarter, with the overall index climbing to a six-month high.
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Chief business economist Chris Williamson said signs of a manufacturing turnaround began in October, suggesting that economic growth could accelerate in the fourth quarter.
“The main production growth indicator of the IHS Markit Malaysia Manufacturing Purchasing Managers Index (PMI) has risen to its highest level in a year, roughly indicating an annual economic growth rate of more than 5%,” he said in a statement.
He said that output was particularly boosted by improved domestic demand, but external conditions remained challenging, again restraining export growth and raising concerns that more momentum could continue to build without improving global economic conditions.
“Therefore, it is too early to say that the manufacturing industry has come to a corner, but producers are more optimistic about the outlook, which is particularly encouraging for us, as the prospect of employment improvement is coming.
According to a survey by IHS Markit, the overall manufacturing index PMI is a single-digit composite indicator of manufacturing performance, rising from 47.9 in September to 49.3 in October, the highest level in six months, and roughly recovering its historical average.
PMI’s growth is driven by new orders and new output, both indicators showing signs of improvement, and subsequently strengthening business prospects, as more companies report new expansion plans and increase employment Already.
The company said that survey respondents linked demand growth to new product launches and more new job inflows from existing customers.
IHS Markit said that at the beginning of the fourth quarter, other forward-looking indicators also showed an upward trend. Survey data on input purchases, input inventory, and finished product inventory moved in a positive direction, which was equal to or higher than the long-term average Level.
It said: “According to the expert group’s comments, higher output requirements and improved demand have given more companies the incentive to have inventory to accommodate further improvements.”
At the same time, since March, input costs have also fallen for the first time since March, due to deflation due to supplier discounts and falling commodity prices. “As a result, Malaysian manufacturers have reduced output costs to the greatest extent possible since January 2015 to gain a competitive advantage,” said IHS Markit.