Manufacturing rebound cuts supply chain hiatus

According to the latest IHS Markit ASEAN Manufacturing Manufacturing Purchasing Managers’ Index or PMI survey data, the ASEAN region, including the Malaysian index, had a robust comeback in manufacturing output in October. In October, Malaysia did the same.

The headline IHS Markit Malaysia Manufacturing PMI rose to 52.2 in October, indicating a resumption to expansion after COVID-19 limitations were removed.

Last month, both production and new order volumes returned to growth territory.

“October following a reading of 40.2 in September. Economic activity had been heavily disrupted during August and September due to the escalating COVID-19 wave, with temporary business closures, transportation difficulties and staff shortages all contributing to severe contractionary conditions in manufacturing output.

“By October, the declining COVID-19 wave allowed a loosening of COVID-19 restrictions. This led many firms to restart production in October, while others expanded output in response to higher new orders,” the report says.

The latest COVID-19 waves in Southeast Asia caused supply chain disruptions, but the revival in industrial production across many ASEAN countries is expected to support the manufacturing sector and get the supply chain moving.

“Major manufacturing hubs such as Malaysia and Vietnam suffered considerable disruptions to manufacturing output during the third quarter of 2021, impacting on supply chains in many industries, including auto and electronics manufacturing.

“However, even as industrial production rebounds, the process of normalizing production levels and catching up with backlogs of new orders is likely to be gradual.

“In Malaysia, companies continued to report widespread issues with component shortages, shipping delays and a lack of containers in October,” it says.

Meanwhile, AmBank Research said Malaysia’s manufacturing sector saw an upbeat development going into the final quarter of 2021.

Malaysia’s headline figure in IHS Markit Manufacturing PMI rose to 52.2 for October from September’s print of 48.1. Malaysia had seen four consecutive months of contraction in the headline IHS Markit Malaysia manufacturing PMI.

“Moving forward, we can expect that the sector to continue improving driven by healthy global demand, the reopening of economies, strong commodity prices and steadily outperforming electrical & electronic manufacturers. For the full year of 2021, we maintain our projection that the economic growth will hover around 3.0%–3.5%,” says AmBank Research.

The research house expects the sector to continue improving driven by healthy global demand, the reopening of economies, strong commodity prices and steadily outperforming electrical & electronic manufacturers amidst the ongoing supply chain disruption and higher input prices.

For the full year of 2021, “we are maintaining our projection that the economy will grow in the range of 3.0% to 3.5%.” (ENDS)