KUALA LUMPUR: The headline IHS Markit Malaysia Manufacturing Purchasing Managers’ Index (PMI), a composite single-figure indicator of manufacturing performance, rose to 52.8 in December 2021 from 52.3 in November, indicating a stronger improvement in the health of the sector.

       As a result, the average performance over the final quarter was the strongest quarterly performance since the survey began in 2012, IHS Markit said in a research note today.

       Looking at the historical relationship between the PMI and official statistics, it said the latest reading is representative of a solid expansion in manufacturing production and gross domestic product (GDP), as the survey pointed to a broad recovery from the impact of COVID-19.

       "December data suggested that output rose for the third month running. The pace of expansion was moderate and was the quickest since April. Firms commonly attributed the rise to stronger demand as pandemic restrictions were eased. New order volumes also increased at the end of the year, with the rate of growth reaching an eight-month high.

       "Firms noted that stronger client confidence had boosted demand in both domestic and external markets. Concurrently, new export sales returned to expansion territory in December, as stronger demand in the US and China contributed to a fractional rise in new business from abroad," it said.

       IHS Markit economist Usamah Bhatti said the further easing of COVID-19 restrictions alleviated pressures faced by the Malaysian manufacturing sector and provided momentum to growth in December.

       "The average reading of the headline PMI in the fourth quarter was the strongest quarterly performance recorded since the survey began in July 2012, as output and new order growth reached eight-month highs, respectively.

       "Operating conditions remain tough nonetheless, with supply chain delays, as well as material labour shortages widely reported across the sector," he said.

       Encouragingly, he said business expectations for the coming year remained strong overall as a fifth of companies reported optimism that the worst of the pandemic had passed.

       "That said, the degree of optimism eased from November as the outlook remained relatively clouded due to uncertainty regarding the duration of supply chain disruptions, raw material shortages and further disruption caused by new variants of COVID-19," he said. - Bernama