KUALA LUMPUR, Jan 2 — Manufacturing suffered the worst business conditions in the last month of 2018, which saw an industry-wide slowdown extended into its fourth consecutive month, the latest Nikkei Purchasing Manager Index (PMI) released today showed.
The Headline Malaysia Manufacturing PMI, a survey that measures the sector’s overall performance, hit 46.8 in December, down from 48.2 in November, the lowest since the survey was introduced in July, 2012.
The latest reading was consistent with a marked deterioration in the health of the manufacturing economy, which has contracted in each of the last four months.
“Pulling the headline Index further into negative territory was the one of the sharpest contraction in demand in the survey history,” Nikkei Malaysia said in a statement that accompanied the December 2018 index.
“Panellists indicated that the fall in sales reflected a general slowdown across the marketplace.”
Sharp reductions in production and new business pushed the headline index deeper into negative territory in December as concerns over demand led companies to use current stocks to clear backlogs and cut back input purchasing.
This has put more pressure on supply chain, while purchasing costs increased to a weaker extent, the report said.
Malaysian manufacturers also received unfavourable intakes of new work from overseas for the same month.
Orders from European and the Asia-Pacific clients were reportedly down although Nikkei Malaysia noted the decline to be mild.
Concerns about demand conditions led firms to clear their post-production inventories as stocks depleted to the greatest extent since November 2016.
Subdued sales performances also encouraged goods producers to scale back their input purchasing while buying activity fell for a third successive month, the lowest since June 2017.
Reduced purchasing activity placed enormous pressure on vendors, Nikkei Malaysia noted.
The deterioration in manufacturing health was also fuelled by a stagnation in employment, ending six straight months of job creation. The loss of growth momentum was attributed to resignations.
Nonetheless, the survey found confidence strengthened amid upbeat sales forecasts for 2019.
“The trend in business confidence diverged from survey data on current conditions, with optimism strengthening to a four-month peak,” Nikkei Malaysia said.
Source: The Malay Mail Online