Kuala lumpur: MIDF Amanah Investment Bank Bhd expects Malaysia’s manufacturing sector to maintain its recovery momentum, driven by improved factory output and resilient domestic demand, though external headwinds remain a concern.
According to BERNAMA News Agency, the investment bank based its outlook on the latest S and P Global Manufacturing Purchasing Managers’ Index (PMI), which rose to 49.3 in June 2025 – the highest reading since October 2022 – indicating stronger production and a more moderate decline in new orders. MIDF Amanah noted that the improvement in manufacturing output reflects a continued, albeit temporary, boost to external trade, with sentiment in financial markets suggesting expectations are beginning to move beyond tariff-related uncertainties.
However, MIDF Amanah cautioned that persistent weakness in mining output could continue to weigh on overall IPI performance in the months ahead. In a separate statement issued earlier, the Department of Statistics Malaysia (DOSM) reported that manufacturing sales rose 2.4 per cent year-on-year (y-o-y) to RM158.7 billion in May, easing from 4.7 per cent growth in April. Chief statistician Datuk Seri Dr Mohd Uzir Mahidin stated that the May growth was largely driven by the food, beverages, and tobacco sub-sector, which recorded a 13.0 per cent y-o-y gain, following April’s 10.8 per cent expansion.
MIDF Amanah expects manufacturing sales to continue expanding in the short term, supported by a temporary lift from the current pause in tariff hikes ahead of the new US tariff implementation on Aug 1, 2025. Despite ongoing uncertainties and the impact of US tariff hikes potentially constraining production in export-oriented sectors, the firm foresaw that growing domestic consumption and encouraging progress in construction activity would continue to support production in domestically oriented segments.
The investment bank maintains its projection that Malaysia’s IPI growth will moderate to 2.0 per cent this year, following the moderation in overall IPI growth. Continued external uncertainties, particularly from the impact of higher tariffs on final demand, could cause export-oriented companies to scale back production, in addition to fading support from front-loading activities as the US is expected to begin imposing reciprocal tariffs in August 2025.
Nevertheless, MIDF Amanah expects IPI to remain in expansionary territory, underpinned by stronger output in industries with higher domestic exposure, supported by resilient household spending, a healthy labour market, and rising income levels.