Kuala lumpur: The seasonally adjusted S and P Global Malaysia Manufacturing Purchasing Managers' Index (PMI) posted above the neutral mark of 50.0 that separates growth from contraction for a third straight month in August. For August, Malaysia's PMI stood at 50.2, down from 50.7 in both July and June, indicating only a slight improvement in the health of the Malaysian manufacturing sector and one which was the weakest in the aforementioned sequence.
According to BERNAMA News Agency, the historical relationship between the PMI and official data suggests that gross domestic product and manufacturing output growth should improve in the third quarter of 2026, as stated by S and P Global. Malaysian manufacturers recorded a third consecutive monthly rise in new orders; however, the expansion was only marginal and the weakest in the current growth sequence due to a slowdown in new orders broadly consistent with those weighing on output.
S and P Global explained that sustained growth in new orders encouraged some firms to expand their payrolls. As a result, August marked the first rise in employment in four months, with manufacturers taking on both full- and part-time staff. Amid subdued demand conditions, manufacturers remained divided in their operating trends. Employment rose for the first time in four months, while purchasing activity declined for the first time in five months as firms drew on inventories to meet demand requirements, according to S and P Global Market Intelligence economist Maryam Baluch.
Looking ahead, Baluch noted that confidence remained muted, suggesting that current challenging conditions are likely to persist over the coming year. However, softer price pressures could give firms some scope to support demand growth and, in turn, lift production. Meanwhile, Malaysian manufacturers continued to face longer lead times for inputs, with poor weather conditions, low stock availability, and port congestion cited as the main factors behind delays. Nonetheless, the incidence of delays was only slight and the least pronounced in seven months, S and P Global highlighted.
Turning to prices, both input costs and output charges rose modestly in August, with inflation rates easing further. The rates of increase were the weakest in six months and historically subdued. Where prices did rise, firms attributed this to higher fuel and raw material costs, which were often passed through to customers. S and P Global added that Malaysian manufacturers were generally confident output would rise over the coming year; however, positive sentiment remained historically weak and broadly unchanged from July. Optimism was generally centred on hopes that demand will continue to improve, the report concluded.