New orders decline at sharpest rate in over 3 years: PMI

November 2, 2015 | By | Reply More

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KUALA LUMPUR: Production has declined in Malaysia in October, underpinned by a sharp contraction in new orders.

According to the headline Nikkei Malaysia Manufacturing Purchasing Managers’ Index, cost pressures intensified as purchasing prices rose.

At 48.1, down slightly from 48.3 in September, the headline PMI indicated a further worsening in manufacturing conditions in Malaysia.

The latest reading was in line with the average seen over the seven-month sequence of figures below the 50.0 mark.

The rate of contraction was the sharpest in over three years, mostly attributed to reduced demand and challenging economic conditions.

However new export orders at Malaysian goods producers rose for the second month running October and the rate of expansion was the most marked since July 2014.

Despite worsening manufacturing conditions, employment levels increased at the fastest rate in nearly three years.

On the price front, it said reports of an unfavourable exchange rate pushed up imported raw material costs and an increase in sales tax led to a sharp overall rise in input prices.

Commenting on the survey data, Amy Brownbill, Economist at Markit, which compiles the survey, said manufacturing conditions in Malaysia worsened at the start of the final quarter of 2015.

“Production contracted for the seventh straight month, underpinned by the sharpest decrease in new orders in over three years. Subsequently, buying activity reduced as manufacturers drew on existing inventories instead of purchasing new items.”

Inflationary pressures intensified, with input prices rising at the second-strongest rate in the survey history.

“On a positive note, both employment and new export orders expanded in October, with the latter increasing at the sharpest rate since July 2014.”

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