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PMI Shows Malaysia's M'fing Sector Is Back In Contraction


Malaysia's Markit M'fing PMI deteriorated to 39.9 this month from 51.3, suggesting that the manufacturing sector have entered a sharp contraction. This was the worst reading since April 2020, when the original outbreak of Covid-19 battered the global economy. Malaysia's M'fing PMI is highly correlated with the national GDP growth - see chart below (adapted from the original release).

  • IHS Markit said that the renewed downturn was associated with the imposition of Covid-19 restrictions, which "once again dampened demand, stymied production and disrupted supply chains". They added that "the concern is that future output expectations have slumped, falling to the lowest since the survey began almost ten years ago, as companies grew more concerned about the potential impact of further virus waves".
  • The release has generated a tailwind for spot USD/MYR, which is fast approaching yesterday's high of MYR4.1570. The rate last sits at MYR4.1565, 75 pips higher on the day. So far, familiar technical picture remains in play.

Fig. 1: Malaysia Markit M'fing PMI vs. Malaysia GDP Y/Y (%)

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