Malaysia Manufacturing Sector Contracts in September

Malaysia’s S&P Global Manufacturing PMI fell to 49.9 in September 2026 from 50.2 in August. This marked the first deterioration in operating conditions since May, as new orders declined for the first time in four months and at the fastest pace since June 2025, while production growth slowed further to its weakest in seven months. The fall in total new orders came despite a fresh rise in new export orders. Firms reduced input purchases for a second month, while supplier delivery times also deteriorated, with vendor performance worsening at the fastest rate in three months. On a more positive note, employment continued to rise modestly, while companies accumulated stocks of purchases. At the same time, input cost inflation eased for a fifth month to its lowest since February, while output price inflation slowed to a seven-month low. However, business confidence remained subdued, with sentiment toward the year-ahead outlook weakening slightly to a five-month low.

Malaysia’s S&P Global Manufacturing PMI edged down to 50.2 in August 2026 from 50.7 in each of the previous two months. Growth in new orders slowed during the month, contributing to a renewed moderation in manufacturing output. Still, firms increased employment for the first time in four months, while backlogs of work fell for a second consecutive month. Meanwhile, buying activity declined for the first time in five months as firms drew on inventories to meet demand, causing input inventories to fall after two months of marginal accumulation. Manufacturers also continued to face longer lead times for inputs, though the incidence of delays was only slight and the least pronounced in seven months. Regarding prices, both input costs and output charges rose modestly in August, with both rates of increase easing to six-month lows and remaining historically subdued. Finally, business confidence remained historically weak and was broadly unchanged from July.

Malaysia’s S&P Global Manufacturing PMI came in at 50.7 in July 2026, unchanged from the previous month. Growth in new orders accelerated to an eight-month high, while production increased only slightly. Supporting the rise in total new orders was a renewed increase in new export orders, driven by improved demand from international customers, including those in Europe and the US. This also pushed purchasing activity marginally into expansion territory. However, supplier lead times lengthened for an eighth consecutive month. Meanwhile, firms reported having sufficient capacity to process existing workloads and new order inflows, as reflected by a renewed decline in backlogs. With this, manufacturers reduced employment levels in July. Both input costs and output prices increased at their weakest rates in five months. Nonetheless, business confidence fell to a three-month low and remained subdued by historical standards, as geopolitical tensions continued to weigh on the outlook.