Companies Expect Positive Business Environment Amid PPI Increase
Malaysian firms are expecting a favourable business environment in the first quarter of 2025 (1Q25), underpinned by a positive confidence indicator of 3.2% compared to 4.8% in the previous quarter, with the services, construction and industry sectors being the three that expect better business condition in that period.
“The business confidence for the services sector remains positive, with the confidence indicator increasing to 13.5% from 13.1% in the preceding quarter.
“Simultaneously, sentiments within the construction sector have reversed to positive, posting 12.5% compared to -10% in 4Q24,” DOSM said in a statement.
Meanwhile, the industry sector continues to be optimistic about business performance with a confidence indicator of 0.2% for the quarter under review against 1.2% in 4Q24.
However, DOSM noted that businesses within the wholesale and retail trade sector expect a pessimistic business outlook as the confidence indicator fell to -8.1% in 1Q25 from 5.5% in 4Q24.
Nonetheless, the retail trade sub-sector remains on a positive trajectory, recording 4.1% compared to 11.9% previously.
“Looking ahead, the business outlook for the first half of 2025 remains upbeat despite moderating with a net balance of 11.9% against 13.8% previously, with all sectors registering positive results except for wholesale and retail trade, which showed a neutral opinion.
Sentiments within the services sector for January to June 2025 remain positive with a net balance of 27.5%, the same as the previous quarter, while the construction sector also foresees an optimistic business outlook, with a net balance of 12.5%, down from 16% in the same period before.
The department also noted that concurrently, the industry sector anticipates favourable business conditions with a net balance of 6.8% compared to 4.3% previously.
It added that the wholesale and retail trade sector shows neutral confidence regarding business expectations for the next six months, influenced by mixed perceptions within the wholesale and retail trade sub-sectors.
DOSM also reported that the country’s Producer Price Index (PPI) that measures the price changes at the producer level, rose by 0.8% year-on-year (YoY) in January 2025, extending the 0.5% increase recorded in December 2024 – mainly driven by the agriculture, forestry and fishing sector, while mining and manufacturing sectors saw marginal declines.
Chief statistician Datuk Seri Dr Mohd Uzir Mahidin noted that the three main sectors grew 16.5% YoY in January 2025 compared to a 23.8% increase in December 2024, with the growing of perennial crops index standing out as the main contributor, rising by 29.4%.
Meanwhile, the mining sector remained on a downward trend, contracting by 1.3% (December 2024: -7%) with declines in crude petroleum and natural gas output.
At the same time, the manufacturing sector decreased by 0.6%, which is a smaller contraction compared to a 1% decline in the previous month.
On a month-on-month basis, Mohd Uzir said that PPI local production registered a 0.3% increase in January 2025, slowing from 0.8% in December 2024.
Elaborating further on the PPI local production by stage of processing, Mohd Uzir said the crude materials for further processing index rose 2.4% YoY, up from 1.9% in December 2024.
“This increase was mainly attributed to the non-food materials index, which rose by 3.1%,” he mentioned.
