It pointed to a slightly stronger, yet still modest improvement in the health of the Malaysian market manufacturing sector, and extended the current sequence of expansion to three months, said S&P Global.
S&P said in a statement that the Malaysian manufacturing sector saw overall operating conditions improve at a slightly quicker rate halfway through 2022. Production levels stabilized for the first time following five consecutive monthly declines, while new orders rose for the third month running, albeit only fractional.
However, manufacturers noted that inflationary pressures strengthened for the first time in three months, as input costs and output prices increased at sharper rates amid sustained material shortages and rising energy prices.
Moreover, businesses grew increasingly concerned that rising prices would weigh on the manufacturing sector, alongside the ongoing impact of the pandemic globally.
As a result, the degree of business optimism fell to the lowest since last August.
S&P Global Market Intelligence chief business economist Chris Williamson said Malaysia's manufacturers reported a steady but unspectacular end to the second quarter, underscoring how the economic recovery has lost some steam compared to the start of the quarter.
"Companies are reporting sluggish export sales and growing concerns over the rising cost of living, especially in terms of rising energy and fuel prices," he said.
According to him, both input costs and average selling prices are rising sharply again, suggesting inflationary pressures continue to build.
"While there was good news in terms of some supply constraints showing clear signs of easing which should help alleviate some industrial price pressures, global energy and food supply having become increasing sources of concern," he added.
Latest comments