Modest recovery in business conditions in Q3: MIER

THE Business Conditions Index (BCI) posted a modest recovery of 25.3 points in the third quarter (Q3) of 2020, settling at 86.3 points as compared to a major drop of 22 points in Q2, indicating a boost in manufacturers’ confidence level.

According to the Malaysian Institute of Economic Research’s (MIER) Business Conditions Survey Report, business sentiments remained cautious as the index was below the threshold level as it had been for seven consecutive quarters.

Nevertheless, on year-on-year basis, the index expanded at a favourable rate of +17.2 points as compared to -39.7 points in the previous year.

“It is a good sign to Malaysia as the nation managed to slowly recover from the COVID-19 pandemic.

“This is in line with the active Malaysian government interventions in the market, through the Prihatin Rakyat Economic Stimulus Package (PRIHATIN) and National Economic Recovery Plan (PENJANA) programmes,” MIER said in the report.

The report stated compared to the previous quarter, most of the BCI components showed a substantial improvement due to the rise in domestic demand as well as export demand which influenced sales.

“Consequently, production and capacity utilisation remarked an increase. Additionally, there is a marginal increase in capital investment and this could be due to the higher prospect of business conditions in the near future,” it said.

The report said a positive outlook was expected in the quarter ahead as the Expected Index (EI) had increased progressively by 15.2 points and settled at 99.7 points.

“The upward movement in the EI can be attributed to the positive reading in expected domestic and export sales, production volume and employment as compared to the previous quarter.

“Manufacturers kept on believing in the economic recovery for the next quarter. In particular, the expected production increased pronouncedly by 13.1 points from the previous quarter. The same goes to the expected export sales with a slight increase of 2.1 points from the preceding quarter.”

MIER’s report further stated that a large number of manufacturers (60%) were expected to retain their current employees through Q4 of 2020 and more than half of them (51%) planned to retain the current domestic selling prices.

“Therefore, it is quite likely that business conditions may be much nicer in the next three months as compared to this quarter,” it said. – Oct 21, 2020, Bernama


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