Malaysia’s manufacturing shows resilience as capacity utilisation strengthens in late 2025

All major manufacturing sectors surpassed the 80-percent mark in Q4.

Malaysia’s manufacturing industry ended 2025 on a firmer footing, according to the latest statistics released by the Department of Statistics Malaysia (DOSM).

Capacity utilisation rose notably in the fourth quarter, signalling sustained industrial activity amidst a challenging global economic backdrop.

The manufacturing sector operated at 83.3% capacity in the final quarter of 2025, up 1.4 percentage points from the same period in 2024 (81.9 %). Quarterly, this also marked a 0.4-percentage-point increase from the third quarter of 2025, when capacity utilisation stood at 82.9%.

For the full year, the industry averaged 82.6 % utilisation, an improvement of 0.8 percentage points over 2024’s rate of 81.8 %, reflecting broader underlying strength in production.

Sub-Sector Performance

All major manufacturing sub‑sectors exceeded the 80 % mark in the fourth quarter. Leading the way were the Non‑Metallic Mineral Products, Basic Metal & Fabricated Metal Products sub‑sector at 84.9 % and the Transport Equipment & Other Manufactures segment at 84.8 %, the latter posting one of the strongest year‑on‑year increases (+2.8 percentage points).

Export‑oriented industries also exhibited improvement, with capacity utilisation climbing to 82.5%, an increase of 1.6 percentage points from Q4 2024. Notable gains were seen in the computer, electronics, and optical products industry (+4.5 percentage points) and the vegetable & animal oils & fats segment (+3.7 points), although some sub‑industries, such as wood products and related materials, continued to lag below the 80 % threshold.

Meanwhile, domestic‑oriented industries recorded utilisation of 85.0% in the fourth quarter, with robust performances from motor vehicles, trailers & semi‑trailers (84.7%) and basic pharmaceuticals, medicinal chemicals & botanical products (88.6%). Certain sectors, like paper and paper products, remained less buoyant with utilisation at 78.2%.

Regional Variations

Capacity utilisation varied across regions. Seven states — including Federal Territory of Labuan (97.6%), Terengganu (87.1%) and Selangor (85.7%) — posted rates above the national average. Perlis, however, recorded the lowest utilisation at 68.4%, underscoring uneven industrial activity within the country.

Broader Economic Context

The manufacturing sector’s improving utilisation comes against the backdrop of Malaysia’s broader economic growth, with official estimates pointing to a robust expansion in gross domestic product in the latter stages of 2025, supported by strong performance in services, construction and manufacturing itself.

Challenges remain, with factors such as fluctuating global demand, supply chain constraints and periodic maintenance impacting some segments’ capacity use. Nonetheless, the latest data suggest the industry is navigating these headwinds with relative resilience, indicating renewed momentum as the country moves into 2026.