KUALA LUMPUR: The headline IHS Markit Malaysia Manufacturing Purchasing Managers' Index -- a composite single-figure indicator of manufacturing performance -- rose to 49.9 in March from 47.7 in February this year.

IHS Markit, in a statement today, said the latest reading pointed to a stabilisation in operating conditions, with the headline Index reaching its highest since July 2020.

Chief business economist Chris Williamson said the Malaysian manufacturing sector took further welcome steps on the road to recovery in March, with rates of order book and export decline easing.

"While current production remains subdued, firms are gearing up for better times ahead, especially in relation to hiring. March saw jobs being created at the fastest rate for two years as business grew more optimistic about the outlook," he added.

Williamson said the supply of inputs continued to deteriorate, adding to manufacturers' headwinds, but rising global trade should help alleviate some of the shortages in coming months, driving further expansion of Malaysian production and taking some of the heat out of prices.

IHS Market said Malaysian goods producers have also signalled the first expansion in employment levels in 12 months in the latest survey period.

Preparation for orders in the future reportedly required additional capacity, and pushed the seasonally adjusted Employment Index to the highest since April 2019.

IHS Market said despite headwinds from supply shortages and ongoing COVID-19 related issues, Malaysian manufacturers displayed a stronger degree of optimism on the outlook for output in the coming year.

Firms recorded the highest level of positive sentiment for six months in March with its panel members attributed the improved outlook to hopes that a recovery in both domestic and external demand would boost production levels and sales over the next 12 months.

-- BERNAMA