Malaysia’s manufacturing PMI slides in August on contraction in new orders

Malaysia’s manufacturing Purchasing Managers’ Index (PMI) slid during the month of August, following a contraction in both production as well as new orders that contracted at a faster pace, leading to a quicker decline in payroll numbers and a further reduction in input buying.

The Nikkei manufacturing purchasing managers' index, a gauge of the country's factory activity, was at 47.4 in August versus 48.1 in July. A PMI reading below 50 indicates a contraction in manufacturing activity, while a reading above that signals an expansion.

Further, output at Malaysian manufacturers decreased for the seventeenth consecutive month in August. Over one-quarter of surveyed respondents recorded a fall in production compared to the previous survey period. A number of panelists mentioned a lack of new orders and challenging economic conditions, Nikkei reported.

Moreover, a fall in production was matched by a quicker decline in total new orders. Also, International demand contracted for the third consecutive month in August. However, the rate of decline eased further from June’s 43-month record and was only marginal overall.

"Meanwhile, cost inflationary pressures intensified, with input prices increasing at the joint-second fastest rate in the series history. This was linked by the survey panel to higher raw material costs stemming from unfavorable rates and the rise in the sales tax," said Amy Brownbill, Economist, HIS, Markit.

Manufacturers in Malaysia also cut back on their input buying. However, the rate of decline was the weakest in the current 15-month sequence of .contraction