manufacturing

by SHAUQI WAHAB

MALAYSIA’S manufacturing sector showed further signs of improvement in July, as easing declines in new orders and production pointed to a more stable demand environment.

According to data from S&P Global, the seasonally adjusted manufacturing Purchasing Managers’ Index (PMI) rose to 49.7 in July, up from 49.3 in June.

This marks the third consecutive month of improvement.

Although the index remains below the 50-point threshold — which separates expansion from contraction — the upward trend suggests the sector is gradually recovering.

“Malaysian manufacturers saw pressure on operating conditions soften at the start of the second half of 2025 (2H25), as the latest PMI data signalled that the sector moved towards stabilisation,” S&P Global economist Usamah Bhatti said.

The data also showed a slight but notable increase in purchasing activity.

While modest, it was the first uptick in exactly three years and the strongest since April 2022 — a positive sign that firms are beginning to respond to improving conditions.

S&P Global acknowledged that these indicators point to a solid start for the third quarter of the year (3Q25), consistent with annual growth in official manufacturing output figures.

Malaysia’s economy grew 4.5% year-on-year (YoY) in 2Q25, slightly higher than the 4.4% recorded in 1Q25, driven largely by strong domestic consumer demand despite ongoing export challenges, according to preliminary government estimates.

Manufacturers surveyed remained optimistic about future output, anticipating stronger market demand ahead.

“The overall level of confidence strengthened from June and was the highest for five months,” S&P Global reported.