KUALA LUMPUR: The seasonally adjusted S&P Global Malaysia manufacturing purchasing managers’ index (PMI) rose to 49.7 in July, up from 49.3 in June. The latest reading indicates the slowest decline in manufacturing sector health in five months.
“Malaysian manufacturers saw pressure on operating conditions soften at the start of the second half of 2025, as the latest PMI data signalled that the sector moved towards stabilisation. New orders were only fractionally lower than in June, owing in part to an expansion in export sales for the first time in eight months. As such, production levels were scaled back at a softer pace,” S&P Global Market Intelligence economist Usamah Bhatti said.
He added that employment levels were broadly unchanged on the month in July, while there was an uptick in purchasing activity for the first time in exactly three years, and one that was the most pronounced since April 2022.
“Confidence in the year ahead outlook also gathered momentum during July, with the level of optimism reaching its highest since February. Firms pinned their hopes on a broad-based demand and economic recovery, notably in the domestic market,” Bhatti said.
S&P Global noted that the historical correlation between the PMI and official GDP data indicates a solid start to the third quarter, with continued GDP growth. The data also point to a year-on-year rise in official manufacturing output.
It said new orders neared stabilisation at the start of third quarter, with the index just below the neutral 50.0 mark—signalling the slowest decline in five months. The shift was partly driven by a renewed rise in export orders, the first increase in eight months.
Production eased slightly, marking the mildest decline since February, in line with the trend in new orders. Firms cited subdued local demand as a key factor.
S&P said the latest data signalled a renewed rise in purchasing activity—the first in three years and strongest since April 2022, albeit marginal. Firms cited early signs of improving demand as motivation for higher purchases.
Input and finished goods stocks were broadly stable, while stronger input demand and shipping delays led to slightly longer delivery times—the most marked in six months.
S&P noted that employment dipped slightly in July after a marginal rise in June. Despite this, capacity pressures remained low, with backlogs declining at the fastest pace since February. Anecdotal evidence suggested that firms looked to complete existing orders amid muted demand conditions.
Additionally, input cost inflation accelerated for the third straight month in July, reaching its highest level since November 2024. The rise was largely attributed to higher raw material prices and a weaker exchange rate.
In response, selling prices for Malaysian manufactured goods increased modestly, with some firms passing on cost pressures. However, the rate of output price inflation was little changed from the previous month.
“Hopes for an improvement in market demand were key to optimism regarding the 12-month outlook for output at the start of the third quarter. The overall level of confidence strengthened from June and was the highest for five months,” it said.
Malaysia factory slump eases as July PMI hits five‑month high. (2025, August 1). The Star. https://www.thestar.com.my/business/business-news/2025/08/01/malaysia-factory-slump-eases-as-july-pmi-hits-five-month-high
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