Malaysia's manufacturing sector experienced a deeper downturn in April, as recent data indicates that companies reduced their output in response to continued weak demand.

According to the latest report from S&P Global, which compiles the manufacturing Purchasing Managers’ Index (PMI), the seasonally adjusted PMI declined to 48.6 in April, down slightly from 48.8 in March.

This marks a further movement below the neutral threshold of 50.0, which separates expansion from contraction. A PMI reading below 50 reflects a shrinking manufacturing activity, suggesting that businesses are facing ongoing challenges such as lower new orders, weaker market sentiment, or supply chain constraints, The Edge Malaysia reports.

“Further evidence indicates that conditions are likely to remain muted in the short- and medium-term,” stated Usamah Bhatti, an economist at S&P Global. “Firms opted to work through existing orders in the absence of new order growth while also scaling back employment, purchases and stock holdings.”

Yet despite the decline in manufacturing activity, the figures still align with the broader trend of ongoing economic growth seen since the last quarter of the previous year, Bhatti noted in response to the latest data.

Recently, both the government and Bank Negara Malaysia indicated that the projected economic growth rate of 4.5% to 5.5% for 2025 may be subject to revision, as rising external challenges, particularly those stemming from global trade tensions, pose risks to the outlook.

Furthermore, preliminary estimates indicate that Malaysia’s gross domestic product growth may have eased to 4.4% in the first quarter of 2025.

According to S&P Global, findings from the latest PMI survey also point to the likelihood of persistently challenging business conditions in the near term, suggesting that the manufacturing sector may continue to face headwinds in the months ahead.

In addition, S&P Global noted that manufacturers' confidence in the 12-month production outlook weakened compared to March, reaching its lowest level since July 2023.

This decline in sentiment reflects growing concerns about the global economic environment and uncertainties in international trade, which continue to weigh heavily on business expectations.