KUALA LUMPUR: With strong export orders, Malaysia’s production output rose in April for the first time in over two years.
According to the headline Nikkei Malaysia Manufacturing Purchasing Managers’ Index (PMI), production improved to 50.7, supported by a marginal rise in new orders.
Companies are buoyed by the stronger numbers, which are giving a boost to growth confidence over the coming 12 months.
The April survey showed that new export orders rose at a solid pace – the best since July 2014.
Growth was underpinned by a solid gain in new export orders, as foreign demand for Malaysian-produced goods strengthened and helped to offset ongoing weakness from domestic clients.
China, Europe, Japan and the Middle East were all notable sources of new sales success.
"With output rising at a slightly faster rate than new business over the month, manufacturers were able to make inroads into their backlogs of work outstanding," said the report.
It said April’s survey marked the first time that backlogs have fallen, with the decline the greatest recorded in a year.
Meanwhile, reports re-emerged that adverse currency movements have raised the price of raw materials.
Average input prices subsequently rose sharply in April, with the rate of inflation
remaining historically high.
The report said where possible, Malaysian manufacturers are seeking to pass on their increased costs to clients, through a rise in average output charges.
Paul Smith, Senior Economist at IHS Markit, which compiled the survey, said: “April’s survey marked a somewhat positive turnaround for the manufacturing sector, with output and new orders rising concurrently for the first time in over two years.
"With export growth also possibly supported by relative currency weakness, the corollary was a further sharp rise in input costs, with firms seeking to pass these on wherever possible to clients.”