Mier: Consumer sentiment still weak
Recent surveys conducted by the Malaysian Institute of Economic Research (Mier) have found that although Malaysian manufacturers are highly optimistic about the year ahead, consumer sentiment has remained weak despite a slight improvement.
The Business Conditions survey stated that Malaysian manufacturers were upbeat entering into the first quarter of the year, with the Mier Business Conditions Index (BCI) registering 112.7 points during the quarter, its highest in the past 10 quarters.
The index rose by 31.5 points during the the quarter, reflecting optimism towards the economic environment in 2017, Mier said.
“Current sales, new export orders, together with expected production and expected export sales contributed significantly to the rebound of the BCI,” it said in the report.
The higher index was attributed mainly to the significant jump in the Expectation Index, which saw a growth of 57.5 points.
“This may be due to the expected growth in manufacturing production and export sales in the second quarter of 2017 in view of the recovery in exports, driven by improved global demand in export-oriented manufacturing products,” it said.
Based on the survey, 43% of respondents reported strong sales during the first quarter, up from 22% in the previous quarter while six of the eleven sectors surveyed reported an expansion in sales.
Sales growth was the highest in the sectors producing heavy machinery and transport equipment, followed by non-metallic, rubber and plastic products.
New export orders during the quarter were also higher, with 44% of respondents reporting higher new export orders compared to 15% in the preceding quarter.
“To meet increasing sales together with the increase in new domestic and export orders, factory production lines maintained a strong pace in the January to March period,” it said.
During the quarter, 25% of the manufacturers surveyed had ramped up production, compared to 22% during the final quarter of 2016.
The survey also pointed toward dropping inventory levels across the manufacturing sector, indicating that sales growth was outpacing the replacement of stock.
On wages, the survey found that salaries rose rapidly during the first quarter, with 68% of the companies surveyed disclosing that their wage costs per unit had gone up.
“However, this quarter’s results may largely reflect the usual New Year increment rather than any significant upward pressure on wages,” it noted.
Respondents of Mier’s Consumer Sentiments survey, however, were not as upbeat.
The survey noted that consumers headed into the new year with caution and discretion as external headwinds continued to challenge the country’s economy.
The Mier Consumer Sentiment Index (CSI) stood at 76.6 in the first quarter, gaining 6.8 and 3.7 points quarter on quarter and year on year respectively.
The latest figures represent the 11th consecutive quarter of the index, hovering below the 100-point threshold level of confidence.
This, Mier said, indicated that although consumer sentiment has improved, it generally remained weak.
