KUALA LUMPUR (July 1): The Malaysian manufacturing sector showed signs of stabilisation in June 2025, with business conditions improving marginally from May, according to the latest S&P Global Malaysia Manufacturing PMI data.
In a statement on Tuesday, S&P Global data showed that the reading rose to 49.3 in June, up from 48.8 in May, marking its highest reading since February, but still below the 50.0 neutral mark.
“The latest PMI reading suggests that the modest growth in official GDP (gross domestic product) statistics in the first quarter of 2025 was sustained into the second quarter. The data also suggest that the expansion in manufacturing production continued throughout the second quarter,” read the statement.
New orders also fell at the slowest rate in the current four-month sequence of declines, suggesting easing demand pressures.
Some firms reported a gradual improvement in demand conditions, though overall client confidence remained subdued.
New export orders declined at the softest pace since December 2024, contributing to the slower reduction in total sales.
In a positive development, manufacturers increased employment levels in June for the first time in nine months.
The fractional rise in staffing levels helped firms address outstanding business, leading to an eleventh consecutive monthly reduction in backlogs.
However, purchasing activity continued to decline, extending the current sequence of reduction to 34 consecutive months.
Input inventories remained unchanged, as some firms opted to maintain stock levels to guard against price increases and supply delays.
Global headwinds hit supply, increase costs, threaten demand
Supplier delivery times lengthened for the first time in three months, indicating some supply chain pressures.
Input costs rose at the fastest pace since November 2024, driven by higher raw material prices and unfavourable currency movements.
Manufacturers responded by increasing output charges at the sharpest rate since August 2024, marking the first price rise in six months.
Business confidence improved slightly in June, but remained well below the historical average, reflecting ongoing economic concerns.
Some optimism stemmed from expectations that new product launches would boost sales and production in coming months.
However, manufacturers continued to express worries about the health of the global economy, and its potential impact on demand.
Manufacturing production appears to have expanded throughout the second quarter, despite ongoing challenges.
Firms continued to utilise existing inventories to fulfill orders, with post-production stocks declining further in June.
The employment increase, though modest, represents a potential turning point for the labour market after nine months of contraction.
Rising cost pressures may test manufacturers’ ability to maintain recent improvements in operating conditions.
The combination of higher input costs and increased output charges could influence inflation trends in the coming months.
While the sector shows signs of stablising, the pace of recovery remains uncertain, given global economic headwinds.
Source: https://theedgemalaysia.com/node/760891