PETALING JAYA: Malaysia’s Manufacturing Purchasing Managers’ Index (PMI) rose to 50.1 in November from 49.5 in October, signalling the sector’s first expansion in 18 months and reinforcing expectations of a strong quarter despite earlier concerns over weaker conditions stemming from higher US tariffs.
Kenanga Investment Bank Bhd (Kenanga IB) said the renewed momentum was underpinned by a surge in new orders, which reached a 43-month high as steady client confidence, recent product launches and a milder slowdown in export demand helped sustain growth.
Its research arm said that although output volumes continued to contract, the pace of decline eased as firms navigated raw material shortages, intensifying competition and higher tax burdens.
“Inventories increased for the first time in 41 months as manufacturers actively replenished stocks to support rising order volumes.
“Cost pressures, however, intensified, with input prices climbing sharply for the second consecutive month on the back of rising raw material costs and tax obligations. These increases filtered through to clients, resulting in the steepest rise in output charges in 15 months,“ Kenanga IB said in a note today.
Even so, it said, firms remained optimistic, with business sentiment reaching its highest level since July 2013, buoyed by new product pipelines, expansion plans and stronger customer demand.
“This renewed confidence translated into higher employment, which grew at its fastest pace since September 2022, effectively ending a four-month decline,“ it said.
On the manufacturing outlook, Kenanga IB said the PMI readings point to stable conditions despite lingering tariff uncertainties.
Export-oriented sectors redirected shipments to other markets as US shipments fell in October.
Steady domestic demand also supported manufacturing activity.
“However, caution remains as the lagged impact of US tariffs may weigh on external demand after the year-end festive season.
“Even so, exports of the E&E sector should stay resilient as they remain exempt from higher tariffs, while domestic-oriented manufacturing will benefit from firm domestic demand, continued government spending under Budget 2026 and the rollout of the 13th Malaysia Plan,“ Kenanga IB noted.
A strong November PMI indicates robust mid-fourth quarter of 2025 manufacturing activity, likely sustaining expansion through year-end and challenging earlier expectations of a slowdown, Kenanga IB said
Together with mining recovery, steady services and firm domestic demand, growth is poised to outperform current estimates. “Nevertheless, we maintain our 2025 GDP growth forecast at 4.5% for now, with an upside bias to upgrade to 4.8% if current momentum persists,“ Kenanga IB said.
