KUALA LUMPUR — Malaysian factories are wrestling with mounting transport and material bills, passing these higher overheads directly to buyers as factory-gate inflation matches rising production costs.

According to the latest S&P Global Malaysia Manufacturing Purchasing Managers’ Index (PMI), input expenses and selling charges rose at identical, accelerated rates in October. Survey respondents pinned the surge in freight and raw material expenses partly on ongoing conflict in the Middle East.

Despite intensifying cost burdens, overall sector performance returned to expansion territory. The headline PMI climbed to 51.0 in October from 49.9 in September, crossing the 50-point threshold separating contraction from growth to mark its strongest showing since April.

New orders surged at one of the fastest paces seen in four and a half years, driven by robust export sales and renewed demand from existing domestic clients. That rebound prompted factories to lift output for the first time in three months and expand headcount for a third consecutive month.

“New orders returned to growth, supported in part by stronger demand for AI-related products, and underpinned a fresh rise in output,” S&P Global economist Maryam Baluch said in the report.