Malaysian businesses reported sustained reductions in both production levels and new orders as the latest rise in COVID-19 cases hampered output and sales across the sector, though both declined at the softest rates for three months, IHS Markit said in a statement on Wednesday.
"Looking at the historical relationship between the PMI and official statistics, the latest reading is representative of a moderation in manufacturing production and broadly stagnant GDP, as the survey pointed to the ongoing impact of the COVID-19 pandemic on the economy," it added.
IHS Markit chief business economist Chris Williamson said that an easing of some COVID-19 lockdown measures helped take some of the pressures off Malaysian manufacturing in August.
"Conditions remain tough for producers, however, with order books continuing to decline, supply chain delays widely reported and raw material prices rising sharply again," he said.
He said business expectations for the coming year improved during the month, as more companies grew optimistic that the worst of the pandemic has passed.
"Concerns over the spread of the Delta variant nevertheless meant the outlook remains more uncertain than earlier in the year, keeping a lid on the overall degree of optimism," he said.