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Sharp decline in business activity in 1H21

FMM In The News: THE MALAYSIAN RESERVE, Wednesday, September 1, 2021 - BUSINESS activity plummeted in the first half 2021 (1H21) amid a tightening of the Covid-19 lockdowns which put further strains on the manufacturing sector, according to the Federation of Malaysian Manufacturers (FMM)- Malaysian Institute of Economic Research (MIER) 19th Business Conditions Survey.

FMM president Tan Sri Soh Thian Lai (picture) said except for cost of production, all the other current and forward-looking indicators in the latest survey registered lower than 2H20, a sign that 1H21 had posed to be a very challenging period for manufacturers and this is expected to continue for the rest of 2021 as well.

“Manufacturers reported that business activity had declined tremendously in the 1H21. The general business activity index plunged far below the 100-point optimism threshold to 65, losing 36 points from 2H20.

“54% of the respondents reported a drop in their business activity in 1H21, up from 37% in 2H20. With 19% notching up their business activity, this proportion represents only half of the prior period’s 38%,” he said in a statement.

The survey, which drew 687 respondents nationwide, was conducted from July 16, 2021 to August 16, 2021 and tracked business confidence via the FMM-MIER Business Conditions Index (FMM BCI) covering the actual performance in 1H21 and outlook for 2H21.

Local sales performed worse than export sales in 1H21. Reflecting this are the latest indexes for current local and export sales which dropped to 56 and 71, respectively, from 2H20.

57% of those who sell locally reported lower sales, while only 13% sold more in recent months. Among those who export, 20% enjoyed higher sales but 49% were hit by lower sales.

The current index for employment fell to 82 from 95 previously, an inference that job intake in the manufacturing sector has been rather passive in 1H21. 26% reduced their workforce in 1H21, while 8% hired more.

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