KUALA LUMPUR: The headline Nikkei Malaysia Manufacturing Purchasing Managers’ Index (PMI) fell further to 48.6 in October from 49.9 in September.
A reading above 50 signals an improvement, while one below 50 points to a contraction in activity.
The latest report said the Malaysian manufacturing sector started the fourth quarter on a subdued note.
"Overall business conditions deteriorated at the sharpest rate since July, following a broad stagnation in the prior month."
The downturn, said the report, was driven by lower volumes of new business, with the rate of contraction the sharpest in three months.
In response to subdued demand conditions and spare operating capacity, firms decreased their payroll numbers at the fastest pace since August 2016.
Firms also cut purchasing activity whilst, on the price front, they continued to face sharp inflationary pressures.
However, firms were restricted in their ability to pass on higher cost burdens to price-sensitive customers.