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1. Export sales growth
2. Rising new orders
3. S&P Global report
New orders rise amid improving export sales in June — S&P Global
The Malaysian manufacturing sector showed stability at the end of the second quarter, with new orders increasing, mainly due to a rise in exports. However, overall demand remained subdued, leading to a slight reduction in production and unchanged staffing levels. Business confidence declined to a 10-month low, while input cost inflation remained stable. The Malaysia Manufacturing Purchasing Managers’ Index (PMI) posted 49.9 in June, indicating stable business conditions. Despite the softer expansion compared to May, the second quarter’s average reading was the highest since 2022, suggesting potential economic growth improvement. Manufacturers anticipate sustained new order growth in the upcoming year, although sentiment dropped in June.
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The Malaysian manufacturing sector showed signs of stability at the end of the second quarter of the year, according to a recent report by S&P Global Market Intelligence. New orders rose in June, driven by improving export sales, although overall demand remained subdued. Let’s take a closer look at the key findings from the report and what they mean for the Malaysian economy.
### New Orders Rise Amid Improving Export Sales
One of the highlights of the report was the increase in new orders for the second consecutive month. This growth was supported by a rise in export sales, with manufacturers reporting higher orders from countries in the Asia Pacific region such as Australia, the Philippines, and Vietnam. Despite this positive trend, the rate of expansion was only fractional, indicating that demand is still somewhat muted.
### Stable Business Conditions
The seasonally adjusted S&P Global Malaysia Manufacturing Purchasing Managers’ Index (PMI) posted 49.9 in June, signaling broadly stable business conditions over the month. While this was slightly lower than the May reading of 50.2, it still reflects an overall steady performance. The average reading for the second quarter was the highest since the third quarter of 2022, suggesting a potential improvement in economic growth.
### Impact on Production and Staffing
In response to the stable demand, firms scaled back production slightly in June and kept staffing levels unchanged. This cautious approach was reflected in the decrease in backlogs of work and the reluctance to hold extra items in stock. Despite these adjustments, manufacturers remained optimistic about the outlook for production, with new order growth expected to be sustained in the coming year.
### Inflation and Pricing Trends
The report also highlighted stability in the pace of input cost inflation, with prices continuing to rise solidly. In response, firms increased their own charges at an accelerated pace, the fastest since September 2022. This shift in pricing strategy may help offset the impact of rising costs and support profit margins in the sector.
### Business Confidence
While the overall picture was one of stability, business confidence slipped to a 10-month low in June. This drop in sentiment, combined with reports of muted demand, suggests that manufacturers are facing challenges despite the positive developments in new orders and export sales.
### Looking Ahead
Despite the mixed signals in the report, S&P Global Market Intelligence economics director Andrew Harker remains cautiously optimistic about the future. He noted that the second quarter data showed improvement compared to earlier in the year, indicating potential growth in the upcoming official data releases.
In conclusion, the Malaysian manufacturing sector is navigating a period of stability, with new orders on the rise and export sales showing improvement. While challenges remain, including muted demand and cost pressures, the overall outlook appears cautiously optimistic. As the sector continues to adapt to changing market conditions, it will be essential for manufacturers to remain agile and responsive to ensure long-term success.
Source: [S&P Global Market Intelligence](https://www.spglobal.com/marketintelligence/en/news-insights/latest-news-headlines/new-orders-rise-amid-improving-export-sales-in-june—s-p-global)
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