KUALA LUMPUR – Businesses have indicated that Malaysia’s manufacturing sector saw demand conditions soften midway through the second quarter of 2022 as productive capacity was hindered by price pressures and supply shortages.
S&P Global said there was a further moderation in production levels that was the fifth in as many months, while new order growth slowed sharply from April 2022.
“The lack of productive capacity also extended into the labour market as the rate of job shedding quickened to the sharpest seen since August 2020,” it said.
The seasonally adjusted S&P Global Malaysia Manufacturing PMI fell from 51.6 in April to 50.1 in May 2022, indicative of broad stagnation in manufacturing operating conditions.
“New order growth slowed sharply in the latest survey period,” S&P Global said in its latest reading released today.
S&P Global Market Intelligence chief business economist Chris Williamson said the lockdowns in mainland China, in particular, continued to aggravate the supply situation which, alongside difficulties sourcing workers, led to a deteriorating factory production trend.
“Optimism has been buoyed by stronger export sales and signs of a possible peaking of both supply delays and input cost inflation.
“Supply chains lengthened to the least extent for almost a year in May, and input costs rose at the slowest rate since last September, both welcome indications that the supply and inflation crisis may be starting to ease,” he said.
S&P Global said manufacturers also reported that raw material shortages and rising prices had dampened client demand and production capacity.
Meanwhile, foreign demand for Malaysian manufactured goods continued to rise in May.
The rate of growth quickened from April to reach the sharpest in 13 months as some panellists reported strengthened demand in key markets outside of mainland China as the pandemic impact dissipated, it said.
It added that despite the reintroduction of restrictions in mainland China, manufacturers were increasingly confident that output would rise over the coming year, citing hopes that the end of the pandemic would encourage a full easing of restrictions.
“This would aid a broad-based recovery in market demand and supply chains,” it said. – Bernama, June 1, 2022
