- The Industrial Production Index (IPI) for Malaysia registered a growth of 6.9% YoY in March, driven by all three segments of IPI which include manufacturing, mining and electricity (February: +5.2%).

- Manufacturing output grew at a stronger pace of 6.3% YoY (February: +4.0%) and electricity registered a healthier growth rate of 3.8% (February: +1.9%).

- Meanwhile, mining advanced by 9.2%, which is broadly unchanged from February’s growth of 9.3%. The increase was attributable to the Crude Oil index which advanced by 20.3% in March. However, Natural Gas index declined by 2.4%.

- For the manufacturing segment, the increase was attributable to the E&E (+13.0% YoY); Petroleum, Chemical, Rubber and Plastic Products (4.5%); and Non-metallic Mineral Products, Basic Metal and Fabricated Metal Products (5.6%).

- Elsewhere, manufacturing sales rebounded to register a growth of 4.4% totalling RM58.4bil (from -2.6% in February), owing to the strong growth in the E&E segment (refer to Chart 2).

- As for the export-oriented industries under IPI, the latest available statistics showed a growth of 5.2% in February, which is slower compared to January’s growth of 6.0%.

- In part, the slowdown in the export segment of IPI in February was attributable to the Electronic and Electrical Products; and Chemicals and Chemical Products and Petroleum Products.

- That said, factory output had registered a stronger growth in the subsequent month on the back of the improvement in exports during the month of March.

- To recap, Malaysia’s exports rebounded to register a growth of 2.3% YoY to RM66.5bil in March, driven by the shipments of E&E (February: -9.7% YoY).

- Going forth though, growth for the manufacturing segment is unlikely to sustain owing to the weaknesses in both global demand and domestic consumption.

- Note that domestic-oriented industries had narrowed to +0.3% in February (vs. +8.4% in January), due to the slower growth in construction output and contraction in the consumer segment.

Source: AmeSecurities Research - 12 May 2015