In a statement today, S&P noted that demand conditions remained muted both domestically and internationally, where sales moderated for an 11th consecutive month in international markets.

“Malaysian manufacturers remained under pressure in March, as the latest PMI data signalled that the sector sank slightly deeper into moderation, following positive signs at the start of 2024.

“New orders, output and employment were all scaled back to a greater extent, and at the most pronounced rates in the year-to-date,” said S&P Global Market Intelligence economist Usamah Bhatti.

He said the muted demand environment allowed for a supplier improvement, as delivery times shortened to the greatest extent in 10 months.

Meanwhile, he said despite another slight pick-up in input price inflation, prices charged for Malaysian manufactured goods were unchanged as some firms lowered output prices in an attempt to stimulate sales.

“Firms remained hopeful of an eventual improvement over the coming year, though concerns were raised about how long the current demand weakness would persist.

“As a result, business optimism faltered to a seven-month low,” Usamah said.

Meanwhile, S&P said that the historical relationship between the PMI and official gross domestic product data indicates that the first quarter of 2024 will likely see continued growth, while the data is also consistent with a slight improvement in official manufacturing production on an annual basis.

S&P said hopes of a stronger improvement in demand were key to optimism regarding the 12-month outlook for output at the end of the first quarter.

“The overall level of confidence eased to the softest since last August, however, as manufacturers highlighted concerns regarding the timing of a hoped-for recovery in demand,” it said.