KUALA LUMPUR: Growth in Malaysia’s manufacturing sector surged to a 43-month high in November, a survey showed yesterday.

The Nikkei Malaysia Manufacturing Purchasing Managers’ Index (PMI) for November came in at 52 — the highest reading since April 2014 — against 48.6 in October.

The headline PMI also recorded above the neutral 50 threshold for the first time in three months. A reading above 50 indicates expansion, while a reading below that signals a contracting manufacturing sector.

According to IHS Markit, which compiles the survey, the overall upturn reflected accelerated growth in both output and new orders, supported by improvements in domestic and overseas demand conditions.

“Growth in output and new orders was the fastest since December 2014 and October 2014 respectively,” it said.

“Output growth was reportedly supported by stronger inflows of new work. Moreover, the rate of expansion in new orders was the most pronounced since October 2014.

“A number of monitored companies commented on stronger underlying demand conditions. Amid reports of stronger overseas demand for Malaysian goods, new export order growth accelerated to the joint-second fastest [behind June 2013] since the inception of the series in July 2012,” said IHS Markit.

In response to greater inflows of new business, it also noted that firms raised their payroll numbers in November at the joint-strongest pace since December 2012.

However, IHS Markit said firms continued to face further sharp inflationary pressures midway through the final quarter of 2017.

“Amid reports of a general increase in raw material prices, input cost inflation intensified further and was sharp overall. Meanwhile, firms raised their average selling prices to pass on higher cost burdens to consumers. That said, output charges were raised at a moderate overall rate,” it noted.

Meanwhile, IHS Markit said the degree of business confidence towards the 12-month outlook for output was also the strongest in nearly four years. “Positive projections for stronger demand conditions and new projects were cited as the key factors behind positive sentiment.”

IHS Markit economist Aashna Dodhia said growth momentum in Malaysia is likely to be sustained towards the end of the year.

“November data indicated a long-awaited improvement in the health of the manufacturing sector. These positive developments fuelled job creation at the joint-strongest rate since December 2012,” she said.

“Moreover, business confidence in the manufacturing community was the strongest in nearly four years,” she added.