Soh cautioned that the outlook for the second half of 2025 (2H25) appears even more challenging, with confidence weakening further across key indicators.

"All major forward-looking indices declined from the previous survey, falling deeper below the 100 threshold and pointing to heightened pessimism.

"Persistent cost pressures are weighing on margins, while investment and employment expectations remain steady but subdued. Businesses are clearly pivoting away from expansion, prioritising efficiency, consolidation and risk management amid uncertainty," he said.

The survey also revealed that US-imposed tariffs are beginning to exert a tangible impact on local manufacturers, though the severity varies.

Around 25 per cent of companies reported no effect, while the largest share, at 38 per cent, faced only minor adjustments.

However, more than one-third experienced deeper strain — 26 per cent cited significant disruptions, while 11 per cent warned the tariffs pose major, long-term risks.

"Among those affected, 55 per cent reported losses of under 10 per cent, but 32 per cent suffered losses of between 10 and 30 per cent, and 13 per cent were hit by more than 30 per cent. This signals serious financial vulnerabilities for a meaningful segment of the industry," Soh said.

To mitigate the challenges, manufacturers are pursuing proactive strategies.

Soh said nearly half are diversifying into new export markets, while others are reassessing supply chains, boosting automation and efficiency, renegotiating costs with US buyers, or adjusting product prices.

Source: https://www.nst.com.my/business/economy/2025/09/1276472/manufacturers-brace-tougher-2h25-amid-global-headwinds