Malaysia's manufacturing sector to support economic growth in Q4: MBSB IB

Malaysia's manufacturing sector is anticipated to continue bolstering industrial production and overall economic growth during the fourth quarter of 2026 (Q4 2026), as projected by MBSB Investment Bank Bhd (MBSB IB). The positive outlook is attributed to robust new order growth, rising export demand, and persistent job creation, all underpinned by Malaysia's outperforming GDP growth of 5.3 percent year-on-year in the third quarter of 2026 and a 53.7 percent year-on-year surge in trade in September.

MBSB IB's latest Manufacturing Purchasing Managers' Index (PMI) figure stands at 51.0 for October 2026, up from 49.9 in September, signaling a return to expansionary manufacturing conditions and the strongest improvement since April 2026. This signals sustained industrial production and economic activity in Q4 2026. The investment bank notes that heightened demand has spurred firms to ramp up purchasing activity and maintain employment growth for a third consecutive month.

However, input cost inflation has accelerated due to surging transportation and raw material costs, partly linked to the ongoing conflict in West Asia, leading manufacturers to raise prices. Nonetheless, MBSB IB warns that escalating input costs, persistent supply-chain disruptions, and a softer business sentiment remain significant downside risks.

Middle East geopolitical tensions and elevated transportation costs could continue to strain manufacturers' margins and contribute to higher producer price inflation in the future.