Malaysia’s manufacturing sector softened slightly in March, with new orders declining at their sharpest pace in a year and production slowing, according to the latest data.
The seasonally adjusted manufacturing Purchasing Managers’ Index (PMI) fell to 48.8 in March from 49.7 in February, according to S&P Global, which compiles the index.
A PMI above 50 indicates expansion, while a reading below 50 signals contraction.
“Malaysian manufacturers remained under pressure at the end of the first quarter of 2025. Confidence waned compared to the previous month with the level of optimism reaching its lowest point in just over one-and-a-half years,” said Usamah Bhatti, an economist at S&P Global, in regard to the latest reading.
Despite the slowdown in manufacturing, S&P noted that Malaysia’s economy will continue to expand in the first quarter of 2025.
Meanwhile, Bank Negara Malaysia has upheld its forecast for steady economic growth of 4.5% to 5.5% in 2025, despite mounting external challenges from global trade tensions, The Edge Malaysia reports.
Malaysia will release its advance GDP estimates for the first quarter on 18th April, with the full second estimate set for May.
As new orders declined and production slowed in March, manufacturers reduced their workforce and did not replace voluntary departures, according to S&P Global.
Purchasing activity, input stocks, and inventories of finished goods were all reduced during the month.
Despite the challenges, firms surveyed by S&P Global are optimistic about a potential improvement in market demand in the future.
However, their overall confidence level remains the lowest it has been since August 2023. This cautious outlook is largely due to uncertainties surrounding the timing and pace of any recovery in demand, leaving businesses unsure of when they can expect conditions to improve.