KUALA LUMPUR – MIDF Research anticipates that manufacturing activities in Malaysia will strengthen further, bolstered by the recovery in domestic demand and robust trade performance.
This was following a significant improvement in factory activities across the country in October 2021 as the IHS Markit Manufacturing Purchasing Managers Index (PMI) soared to 52.2 from September's print of 48.1, recording the first expansion since May 2021.
It said both output and new orders returned to an expansion mode, underpinned by the resumption of economic and business activities following the easing of full lockdown restrictions.
Meanwhile, the employment in the sector was down marginally as businesses faced labour shortages following the ban on the entry of migrant workers.
The upward pressure on producer prices continued to rise, driven by the supply and logistic constraints which led to the input price rising at the fastest pace since May 2021.
“As a result, output prices increased passing more costs burden to the consumers.
On the business outlook, firms remained optimistic with the hopes the pandemic will end and demand to recover," MIDF Research said in its Economic Brief note.
However, it cautioned that a few factors may affect the sector’s growth such as weaker external demand due to slower demand in major trading partners, potentially due to a resurgence of Covid-19 infections and tighter containment measures.
Other factors include the rise in production costs, high commodity prices, and other supply chain challenges.
In a separate note, AmBank Research also expects the sector to continue improving, driven by healthy global demand, the reopening of economies, strong commodity prices, and steadily outperforming electrical & electronics manufacturers amidst the ongoing supply chain disruption and higher input prices.
“For the full year of 2021, we are maintaining our projection that the economy will grow within the range of 3.0% to 3.5%,” it said. – Bernama, November 2, 2021
