Malaysia's manufacturing sector returns to growth in October, PMI at 51.0

KUALA LUMPUR: Malaysia's manufacturing sector recorded a renewed improvement in its health in October 2026, with the S&P Global Malaysia Manufacturing Purchasing Managers' Index (PMI) rising to 51.0 during the month, signalling a return to growth on the back of stronger new orders and output.

The latest reading was higher than the 49.9 recorded in September and the highest since April 2026, with the sector's health improving in four of the past five survey periods.

Economist at S&P Global Market Intelligence Maryam Baluch said the latest PMI data pointed to an improving picture for Malaysia's manufacturing sector at the start of the final quarter.

"New orders returned to growth, supported in part by stronger demand for artificial intelligence (AI)-related products and underpinned a fresh rise in output," she said in a note.

Growth in new orders was among the fastest in four-and-a-half years, reversing the brief moderation recorded in September, as manufacturers benefited from improved underlying demand, particularly from existing customers.

Baluch said firms continued to raise their staffing levels and also increased their purchasing activity for the first time in three months, as they sought to expand operating capacity.

However, supply chain pressures persisted, prompting some firms to draw on stocks of finished goods to meet sales requirements, she said.

She added that inflationary pressures also shifted up a gear, with firms citing higher transport and material costs as the main culprits.

"These cost concerns, together with uncertainty over the economic and geopolitical outlook, weighed on near-term sentiment," she said, noting that manufacturers were the least optimistic since April.

She said the latest PMI data therefore highlighted external headwinds as a key threat to the economy's current resilience.