The decline in Malaysia’s October manufacturing mainly reflects weaker demand which caused manufacturers to adjust production lower, according to MIDF Research.
In its Economic Brief on Wednesday (Nov 2), the research house said the latest survey also shows that inflation eased as selling prices rose at the slowest pace in 2 years.
It said while manufacturers in other countries expressed concerns on the outlook, MIDF said Malaysia’s manufacturers continued to indicate optimistic sentiment.
“Based on recent indicators, we expect growth momentum in Malaysia’s economy to be sustained on the back of growing domestic demand.
“Although the latest PMI readings continued to signal slowing demand, external trade data remained robust defying slowdown concerns,” it said.
MIDF said this also explained why local manufacturers remained positive on the outlook.
Still, the research house maintained a cautiously optimistic outlook for domestic production and trade activities given uncertainties on the external front, such as expected weakening of final demand from advanced economies (amid concerns over recession risk), tighter Covid-19 restrictions in China, and escalation of geo-political and trade tensions.
“Moreover, there is sign of weaker regional trade performance as South Korea reported yesterday its exports declined -5.7%yoy in Oct-22 following weak demand from China.
“Similarly, Taiwan also reported -5.3%yoy fall in exports in Sep-22, also dragged down by weaker shipments to China,” it said.
Source: The Edge Markets