MALAYSIA’S manufacturing sector registered a 20-month high in January 2026, with the headline Purchasing Managers’ Index (PMI) climbing to 50.2 from 50.1 in December 2025, signalling a third consecutive month of improvement in sector health.
According to S&P Global, the increase was underpinned by a renewed rise in production and a stabilisation in new factory orders.
The firm also highlighted that a stronger ringgit contributed to the first reduction in input costs since May 2020, while output prices rose only modestly.
S&P Global Market Intelligence economist Maryam Baluch described the data as a clear sign of strengthening business conditions.
“Production returned to growth, while demand conditions stabilised, supported by a renewed strengthening in demand from overseas,” she said. “Moreover, companies reported a brighter outlook, and confidence was in fact among the highest in the series history.”
Baluch noted that the easing of input costs, following months of inflationary pressure, could support sustained growth in the coming months.
The broader Asean manufacturing sector also showed resilience, with the regional PMI edging up to 52.8 in January from 52.7 in December, buoyed by strong output and new orders.
“Business confidence reached its highest level since April 2023 and was only slightly below the long‑run survey average, indicating that companies expect the sector’s current growth trajectory to continue,” Baluch added.
The survey highlighted growing signs of capacity pressures, suggesting potential acceleration in job creation after periods of modest employment growth. Firms have also stepped up purchasing activity to meet higher production requirements.
“However, the latest improvement was accompanied by a rise in inflationary pressures, with input costs and output charges increasing.
Further price build‑up in the coming months could pose a risk to the growth outlook, and monitoring inflation will therefore be essential moving forward,” Baluch added. - February 2, 2026
