afternoon highlight (15/06/12/106/580) Manufacturing sector sees better outlook in H2

Manufacturing sector sees better outlook in H2

PETALING JAYA: The Malaysian manufacturing sector expects business conditions to improve in the next six months despite concerns over external developments and the rising cost of production, said the Federation of Malaysian Manufacturers (FMM).
The improved outlook was also for both local and export sales and capital investment, which would lead to higher production volume and greater capacity utilisation, it said in a statement citing data from the FMM-MIER Business Conditions Survey, which is a semi-annual survey of business conditions in the manufacturing sector.
Index values under the survey ranged from 0 to 200 points with an index value above 100 indicting an improvement or positive outlook.
An index value above the growth-neutral threshold level of 100 points indicates an improvement or positive outlook, while that below the threshold level indicates a worsening or negative outlook.
The headline FMM-MIER Business Conditions Index (FMM-MIER BCI) is constructed from responses of manufacturers on the current level of business activity, which is a proxy for current business conditions, compared to six months ago.
The FMM-MIER BCI is expected to move up from its current 96.8 points to 120.2 points in the next six months, FMM said.
Nearly three in ten (28%) respondents indicated that they believed the current level of general business activity was higher compared with six months ago, while nearly a third (32%) indicated otherwise.
However, the indices for current local and export sales came in at below the threshold level, a reflection perhaps of the weakening growth momentum of the domestic economy, as well as increasing uncertainties in the global economy, said FMM.
23% of respondents indicated lower local sales compared to six months ago, while slightly less than a third (32%) indicated lower export sales.
However, as indicated by all the forward-looking indicators (except for production cost), survey respondents are positive going forward. Survey results also indicated that manufacturers expected business conditions to improve over the next six months. With two in five (40%) expecting a higher level of general business activity, the forward-looking expected business conditions index notched up 120.2 points.
Going forward, respondents expect improving sales. Nearly a third (33%) anticipate higher local sales, while two in five (40%) expect higher export sales.
Of concern is that nearly two-thirds of respondents (64%) expecting higher production cost going forward, production cost could rise at a faster rate over the next 6 months, said FMM

Source: The Star

Date: 15 June 2012

afternoon highlight (15/06/12/106/580)