The S&P Global Market Intelligence said in a note on Thursday that the PMI dipped slightly from 49.9 in June to 49.7 in July, signaling a fractional moderation in the health of the sector.
The historical relationship between the PMI and official gross domestic product (GDP) data indicates that the second quarter of 2024 will likely see continued growth, though the data are also consistent with a slight slowdown in the rate of increase in official manufacturing production on an annual basis.
According to S&P, July saw a moderation in the Malaysian manufacturing sector as demand conditions remained muted.
Slowdowns were seen in new orders, output, employment and stocks, although firms pointed to firmer conditions overseas which resulted in a further increase in new export orders.
On the price front, the rate of input cost inflation edged higher at the start of the third quarter to reach an eight-month high, which translated to the steepest rise in output prices since September 2022.
"Malaysian manufacturers remained under pressure in July, as the latest PMI data signaled that the sector saw a slightly steeper moderation in operating conditions," said Usamah Bhatti, an economist at S&P Global Market Intelligence.
According to him, new orders, output and employment all softened, with incoming new business falling for the first time in three months.
"According to panel members, the subdued environment was largely limited to the domestic economy, as new export orders rose for the fourth month in a row, and at the joint-fastest pace since April 2021," he noted.
Firms also cited this improvement in demand as a key factor behind the renewed rise in outstanding business, he added.
"Inflationary pressures remained prevalent among Malaysian manufacturers meanwhile, as input price inflation edged slightly up to reach the highest for eight months. This contributed to the strongest rise in output charges since September 2022," he said.
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