- Statistical releases in February suggest that the Malaysian economy remains on a steady growth trajectory owing in part to the healthy labour market condition.
- The Coincident Index (CI) showed improvement as it advanced at a healthier pace of 3.5% YoY (or +0.5% MoM) to 120.1 points in February 2014. This compares with January’s reading of 119.5 points (or +2.3% YoY).
- When compared to January, the increase of CI was attributed to Capacity Utilisation in Manufacturing Sector (0.3%), Volume Index of Retail Trade (0.3%) and Industrial Production Index (0.2%).
- However, the economy will likely succumb to downward pressure on the back of softer domestic demand in 1H14.
- Domestic growth slowed in 1Q14 amid ongoing challenges including the anticipation of further subsidy reforms and weaker domestic sentiments.
- The Leading Index (LI), which monitors economic performance in advance, had moderated to +1.0% YoY (or -0.3% MoM) to 116.0 points in February 2014. In January, the LI registered +2.4% YoY to 116.4 points.
- Components that contributed to the MoM decline of LI in February include Real Imports of Other Basic Precious & Other Non-ferrous Metal (-0.4% MoM), Expected Sales Value in Manufacturing Sector (-0.2%), and Real Imports of Semi Conductors (-0.1%).
- Both Diffusion Indexes for LI and CI remained above 50.0%, which suggest that the Malaysian economy will continue to expand at a moderate pace in the coming months.
- Elsewhere, we note that Malaysia’s labour market conditions remained healthy and has been registering full rate of employment since March 2009. The unemployment rate fell by 0.1ppt MoM to 3.2% in February 2014.
- Note that the total number of those unemployed had declined by 11,300 persons MoM to 446,400 persons. Total employed persons had also reduced by 89,000 persons to 13.441mil.
- The labour force participation rate fell by 0.4ppt MoM to 67.4% as the number of labour force reduced. Total labour force fell by 100,300 persons to 13.887mil in February.
Source: AmeSecurities
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