KUALA LUMPUR: Malaysia’s manufacturing sector showed signs of stabilisation in July, with the pace of moderation easing as demand conditions gradually improved, according to S&P Global.
S&P Global Market Intelligence economist Usamah Bhatti said Malaysian manufacturers experienced softer pressure on operating conditions at the start of the second half of 2025, as the latest purchasing managers’ index (PMI) data signalled that the sector was moving towards stabilisation.
“New orders were only fractionally lower than in June, owing in part to an expansion in export sales for the first time in eight months. As such, production levels were scaled back at a softer pace,” he said in a research note.
According to the note, the seasonally adjusted S&P Global Malaysia Manufacturing PMI rose to 49.7 in July from 49.3 in June, signalling the softest moderation in the health of the sector in five months.
In line with the trend in total new orders, S&P Global said production softened at a mild pace – the least pronounced since February – as firms frequently cited subdued local demand conditions as a continued drag on output levels.
Concurrently, S&P Global said stocks of both inputs and finished goods remained broadly stable at the start of the third quarter, while increased demand for inputs led to longer delivery times in July, amid reports of shipping delays.
Despite employment declining slightly in July, following a marginal increase in June, S&P Global noted little evidence of capacity pressures as Malaysian manufacturers continued to report a further moderation in backlogs of work.
It said input cost inflation accelerated for the third consecutive month in July, reaching its highest level since November 2024, with the rise in cost burdens attributed mainly to higher raw material prices and a weaker exchange rate.
“At the same time, prices charged for Malaysian-manufactured goods rose modestly, with some firms mentioning that material price rises and currency fluctuations were reflected in selling prices,” it said.
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