KUALA LUMPUR: The Malaysian manufacturing sector came under heavy pressure in April as measures to tackle the spread of Covid-19 caused firms to either suspend production or operate well below full capacity.
The headline IHS Markit Malaysia Manufacturing Purchasing Managers' Index (PMI), a composite single-figure indicator of manufacturing performance, stood at 31.3 last month.
This was down from 48.4 in March and pointed to a sharp decline in business conditions that was by far the strongest since data collection began in 2012.
IHS Markit chief business economist Chris Williamson said it was no surprise to see that measures taken to contain the Covid-19 outbreak had led to a sharp fall in manufacturing activity in April.
He, however, said was reassuring to see only a modest fall in employment, as the vast majority of firms held on to staff to safeguard longer term production capacity.
Williamson said business expectations for the year ahead had also ticked higher, as more companies saw prospects improve.
"In that respect, with increasing numbers of governments looking at ways to ease Covid-19 restrictions, it is likely that we will soon see the rate of export decline moderate, helping drive a recovery in production.
"A recovery is nevertheless likely to be sluggish, as global demand looks set to remain relatively subdued for some time," he said in a report today.
Meanwhile, IHS Markit said new orders had fallen sharply in April as a result of the global Covid-19 pandemic, which had resulted in lockdowns being implemented at both domestically and overseas.
Some companies indicated that key clients had shut down.
Latest data also signalled a substantial and survey-record decline in export demand during April, with 83 per cent of companies reporting lower orders from abroad.
Supply chain delays also impeded manufacturers, with firms recording the sharpest month-to-month lengthening in delivery times since data collection started almost eight years ago.
IHS Markit said positively, there were signs of stabilisation in business expectations for the next 12 months.
"Sentiment edged up into positive territory as companies anticipate an economic recovery over the course of the coming year.
"Uncertainty regarding the longevity of the Covid-19 crisis weighed on the outlook, however," it added.
Source: New Straits Times