PETALING JAYA: Malaysian manufacturing sector lost considerable momentum at the end of Q2’21, as rising Covid-19 infections led to a return to stricter containment measure leading to the highest moderation of output and incoming orders since the pandemic’s initial outbreak in April 2020, according to the IHS Markit Malaysia Manufacturing Purchasing Managers’ Index (PMI).
It noted that businesses widely cited the restrictions had significantly disrupted demand and manufacturers signalled a pessimistic outlook for output in the year ahead (for only the fourth time in the survey’s history), amid concerns about the duration of the pandemic.
For June, IHS’ PMI fell sharply to 39.9 from 51.3 registered in the previous month, which pointed to a sharp decline in business conditions in the sector.
Based on the historical relationship between official statistics and the index, the latest reading is representative of a renewed downturn in industrial production and GDP, following a gradual recovery from earlier waves of infections, highlighting the pandemic as the greatest downside risk to the Malaysian economy.
The survey noted both production and new order volumes weakened in June as the rates of deterioration were the most marked – since the peak rates of decline seen last April. It said firms commonly attributed the weakness to the stricter containment measures which dampened demand in both domestic and external markets.
Foreign demand for Malaysian manufactured goods was subdued, though the pace of reduction in export sales was softer than that seen in total new orders. It also found the lower production requirements due to Covid-19 restrictions resulting in a sharp moderation in purchasing activity, with buying falling to an extent not seen since April 2020.
The survey highlighted that Malaysian manufacturers expressed pessimism regarding the year-ahead outlook for the first time since March 2020, with the degree of sentiment was the lowest on record as firms were concerned about the duration of the pandemic and scope for further virus waves to disrupt demand and supply. That said, firms expressed hope that demand would recover once the pandemic was brought under control.
Source: The Sun Daily
