Malaysian manufacturers expanded operations in April, increasing hiring and inventory levels despite ongoing geopolitical tensions in the Middle East that have driven up costs and pushed selling prices to record highs.
According to S&P Global, the seasonally adjusted manufacturing Purchasing Managers’ Index (PMI) rose to 51.6 in April from 50.7 in March. A reading above 50 indicates expansion in the sector, suggesting a modest improvement in overall manufacturing activity.
However, S&P Global noted that part of the growth was driven by “safety-stock building”, as companies moved to secure inventory amid uncertainties linked to the conflict in the Middle East.
“The sector’s outlook in the coming months will depend in part on how the situation in the Middle East develops,” said S&P Global economist Maryam Baluch, adding that manufacturers are already taking steps to cushion potential disruptions.
Malaysia’s economy grew 5.3% year-on-year in the first quarter of 2026, slightly below expectations, as key sectors including manufacturing and services saw slower momentum following escalating geopolitical tensions earlier in the year.
Despite this, the central bank maintains its full-year growth forecast of between 4% and 5%, supported by resilient domestic demand and continued investment activity.
The latest PMI data also showed manufacturers increased hiring for a second consecutive month, with job creation at its strongest pace so far this year, although still described as moderate.
At the same time, companies raised selling prices sharply in response to higher input costs, particularly for energy and raw materials. Input cost inflation reached a 45-month high, prompting firms to pass on these increases to customers at the fastest rate on record.
Nonetheless, business sentiment remained cautious. Confidence among manufacturers weakened for the second straight month in April, falling to its lowest level in eight months, reflecting concerns over the prolonged impact of geopolitical uncertainties.
