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PETALING JAYA: Malaysian manufacturers see the downturn moderating despite a further lack of momentum, as the IHS Markit Malaysia Manufacturing Purchasing Managers’ Index (PMI) improved to 43.4 in August from 40.1 in the preceding month.

Nonetheless the reading remains below the 50 points threshold which marks an overall expansion.

IHS Markit reported that businesses had sustained reductions in both production levels and new orders as the latest rise in Covid-19 cases hampered output and sales across the sector, though both declined at the softest rates for three months. Moreover, the lack of demand pushed manufacturers to scale down workforces in August.

Nonetheless it cited that businesses were increasingly optimistic regarding the year-ahead outlook, with hopes that the end of the pandemic would drive a broad recovery in supply chains and demand.

IHS Markit chief business economist Chris Williamson commented that the easing of Covid-19 lockdown measures helped take some of the pressures off Malaysian manufacturing in August. IHS Markit’s Covid-19 containment index showed the lowest levels of restrictions since April, facilitating a rise in the headline PMI to its highest since May.

“Conditions remain tough for producers, however, with order books continuing to decline, supply chain delays widely reported and raw material prices rising sharply again. Encouragingly, business expectations for the coming year improved during the month, as more companies grew optimistic that the worst of the pandemic has passed,” he said in a statement today.

Nevertheless, Williamson noted concerns of the Delta variant meant the outlook remains more uncertain than earlier in the year, keeping a lid on the overall degree of optimism.

“Concerns over the spread of the Delta variant nevertheless meant the outlook remains more uncertain than earlier in the year, keeping a lid on the overall degree of optimism.”

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