Malaysia's manufacturing activity in April hit a four-year high due to stockpiling efforts amid the Iranian conflict.
The seasonally adjusted S&P Global Malaysia Manufacturing Purchasing Managers' Index or PMI jumped to 51.6 from 50.7 in March, according to S&P Global's latest release on Monday.
Panellists said clients were buying in bulk to build safety stocks as the war in Iran brought uncertainty and hiked oil prices around the globe.
"As firms looked to protect themselves against intensifying price pressures, purchasing activity increased as firms hoped to raise their stocks of preproduction items," S&P Global Market Intelligence economist Maryam Baluch said. "However, with supply-chain disruption widespread, firms continued to see stocks of inputs fall."
While new orders grew domestically, new orders from abroad slowed down for a second straight month due to the ongoing war.
Stockpiling also bolstered local production to its strongest since December 2021, boosting employment, S&P Global said.
Meanwhile, the ongoing war pushed prices higher, as well as energy and material costs.
Manufacturers' business confidence moderated to its weakest in eight months as the Iran war dampened outlook.
Malaysia has been resilient despite external factors that shook the global economy. The country's gross domestic product in 2025 rose 5.2% even though global markets were disrupted by U.S. tariffs. However, the Asian Development Bank predicted in its Asian Development Outlook report last month that its GDP will slow down to 4.6% in 2026 and 4.5% in 2027 if the war in Iran is prolonged.
On the contrary, ADB's Business Tendency Survey showed the continuation of business optimism throughout this year due to government measures that can help mitigate risks.
"The sector's performance in the coming months will be partly shaped by how the situation in the Middle East unfolds, but the latest data already highlights steps manufacturers are taking to mitigate some of the impacts," Baluch said.