KUALA LUMPUR: The Malaysian manufacturing sector is back in recovery mode as the IHS Markit Malaysia Purchasing Managers’ Index resumed expansion in October after four months of contraction.
AmInvestment Bank Research said that the indicator’s move into the growth zone at 52.2 last month suggests the sector is back on track for recovery as the effects of severe pandemic restrictions set in. attenuate.
“It also signals the positive development of Malaysia’s overall economic conditions,” he added in a note on Tuesday.
However, the research company noted that the higher cost factor had limited progress in recovery, due to inputs and container shortages.
As a result, manufacturers increased the price of their production to offset the negative impact.
AmInvest said the improved PMI reading was also supported by improved production, new orders in volume, an increase in open orders and a high positive outlook.
Factors that slowed the recovery included shrinking employment and slow purchasing due to a tight supply chain.
“Going forward, we can expect the sector to continue to improve thanks to healthy global demand, reopening economies, high commodity prices, and manufacturers of electricity and electricity. electronics regularly upgraded amidst continued supply chain disruption and higher input prices.
“For the whole of 2021, we maintain our forecast of economic growth of between 3.0% and 3.5%,” AmInvest said.
Meanwhile, MIDF Research said it also expects manufacturing activities to be bolstered by domestic demand and strong business performance.
However, he said the sector’s growth could be affected by weaker external demand due to a slowdown in demand from major trading partners, potentially due to a resurgence of Covid-19 infections and measures. more stringent containment.
“The other factors include rising production costs, high raw material prices and other supply chain challenges,” he said in his economic bulletin on Tuesday.