The next reading of Malaysia’s manufacturing activity will be closely watched as a key gauge of resilience, even as August data showed tentative signs of improvement, analysts said.
This is partly as the August data may not reflect the full impact of the US tariff revision which came into effect at the start of that month, coupled with weaker year-to-date performance compared with 2024.
S&P Global’s latest data showed that Malaysia’s manufacturing purchasing managers’ index (PMI) inched up to 49.9 in August, the highest in 14 months, from 49.7 in July, supported by a renewed increase in new orders.
However, the recovery was clouded by weakening business confidence and moderating employment levels.
In a note on Tuesday, BIMB Securities said the improvement may partly reflect temporary front-loading ahead of the 19% US tariff hike, which took effect on Aug 1.
This raises the risk of softer momentum in the second half of the year as the effect fades and external headwinds intensify, it said.
In the medium term, the research house said resilient domestic demand, trade diversification, and “China+1” investment could provide some buffer.
Still, elevated risks from US trade policy, geopolitical frictions, and slowing global growth remain major challenges, warranting a cautious policy stance.
Meanwhile, TA Securities highlighted that the September PMI reading will be particularly crucial, as it will capture the real impact of the US tariff hike.
“The upcoming data will determine whether the sector can sustain its tentative recovery despite external pressures, or whether the tariff shock will reverse recent gains,” it said.
TA Securities also cautioned that for January–August 2025, the PMI averaged 49.2, slightly below the 49.4 recorded in the same period last year and the 2024 full-year average, underscoring continued struggles from trade uncertainty, tariffs, and weak external demand.
Source: theedgemalaysia