KUALA LUMPUR: Malaysia's manufacturing Purchasing Managers' Index (PMI) saw a fractional improvement in March, and marked the best reading since May 2015.
Although growth was modest, manufacturers were able to boost output at their plants last month.
March was the second successive monthly rise in production – a significant development, as this is the first back-to-back increase for two years.
The headline Nikkei Malaysia PMI – a composite single-figure indicator of manufacturing performance – posted 49.5 in March, which is little changed from Feb's 49.4.
According to the report, new orders from abroad fell, albeit at a marginal pace.
Output growth has led to a rise in warehouse inventories for a third straight month.
Work backlog continues to rise, reflecting manpower shortages at plants.
"Although the PMI signals optimism for a fourth month in succession, overall confidence is undermined by worries about relatively underwhelming economic conditions," it said, adding that where optimism was recorded, a number of companies have planned new plants and project launches.
Price pressures remain strong heading into the second quarter of 2017, it added.
Costs continue to increase markedly, which manufacturers blame on unfavourable exchange rates pushing up the price of imported goods.