Malaysia’s manufacturing sector recorded the strongest growth in new orders since April in October, and the first rise in production in six months, says IHS Markit data. The Malaysia Manufacturing Purchasing Managers’ Index (PMI) increased to 52.2 in October from 48.1 in September.

The country’s manufacturing sector reported a return to growth at the start of Q4 as coronavirus restrictions eased, as per a statement released on Monday.

“That said, manufacturers commonly noted that sustained supply chain disruptions and delivery delays had held back a stronger recovery, while material and container shortages led to a sharp acceleration in cost inflation.

“As a result, firms increased their output charges at the quickest pace since April,” the statement added.

However, despite the increase in new orders and output, businesses said purchasing activity remained subdued at the beginning of quarter four.

“While the latest fall was only modest, input purchases have now reduced in each of the last five months,” it said.

In addition, foreign demand for Malaysian manufactured goods remained subdued in October, although the pace of the drop in export sales was the softest since May, as demand was given a boost in Europe and the U.S. 

Moreover, employment levels dropped slightly last month, predominantly due to businesses reporting a lack of available staff.

However, IHS Markit said manufacturers were optimistic in regard to activity over the coming year: “Malaysian manufacturers expressed optimism regarding the year-ahead outlook for the fourth month running in October.

“While softer than that seen in September, positive sentiment was in line with the long-run average, underpinned by hopes of a domestic and external recovery in demand should the pandemic continue to dissipate,” it went on to add.