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KUALA LUMPUR: The seasonally adjusted S&P Global Malaysia Manufacturing Purchasing Managers' Index (PMI) fell from 49.7 in February to 48.8 in March, indicating a slight slowdown in sector health.
S&P Global Market Intelligence's Usamah Bhatti said Malaysian manufacturers remained under pressure at the end of the first quarter of 2025, as the latest PMI data indicated a slightly steeper moderation in operating conditions for the sector. He noted that new orders experienced a renewed decline, the steepest in a year, while output, employment, and inventory levels all softened during the month. “According to panel members, the subdued environment was broad-based, as new export orders also fell further, with some evidence suggesting that global trade uncertainty had impacted international demand.
“That said, confidence waned compared to the previous month, with the level of optimism reaching its lowest point in just over one-and-a-half years. Firms pinned their hopes on a broad-based demand and economic recovery but raised concerns regarding the timing of any such recovery,” Usamah said in a report. S&P Global said the historical relationship between the PMI and official gross domestic product (GDP) data indicates that the first quarter of 2025 will likely see continued growth.
The data are also consistent with a broadly unchanged rate of increase in official manufacturing production on an annual basis. New orders in March saw a modest decline, reversing February's brief upturn, while international markets also experienced a similar slowdown due to increased global trade uncertainty. S&P Global noted that production and employment both softened in March, with a slightly faster decline than in February, as firms adjusted to weaker demand and did not replace voluntary leavers.
“Amid slower demand, Malaysian manufacturers recorded a further moderation in backlogs of work. However, the rate of depletion eased compared to the previous month and was only mild. Firms often commented that limited demand allowed them to complete existing orders,” it said.
Meanwhile, purchasing activity, input stocks, and finished goods inventories all declined in March, with reductions strengthening. Despite weaker demand, delivery times lengthened for the eleventh month due to shipping delays, though only marginally. Input cost inflation eased for the second month in March, reaching its lowest level in 2025, driven by higher raw material prices and a weaker exchange rate.
Prices for manufactured goods remained stable, with some firms passing material price reductions to customers. “Hopes for an improvement in market demand were key to optimism regarding the 12-month outlook for output at the end of the first quarter. “However, the overall level of confidence softened from February and was the weakest since August 2023, amid concerns regarding the timing of any demand recovery,” S&P Global said.
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