• IPI moderated to 2.2% yoy and declined by -0.8% mom
• Decrease in mining output and slower production of manufacturing and electricity
• Manufacturing sales in August remained robust
• Productivity grew by 6.1% yoy
• Global semiconductor posts highest ever monthly sales in August
• Slower global industrial production as trade war looms

Industrial output growth slowed down

Malaysia’s industrial production index (IPI) moderated to 2.2% yoy in August following a 2.6% increase in the preceding month. The slower growth was propelled by declining output from the mining sector which dropped 4.6% yoy in August from -5.9% registered in July. Apart from that, there was a tapering off in production in the manufacturing sector (Aug: 4.3%; Jul: 5.2%) and electricity output (Aug: 4.0%; Jul: 4.5%).

On monthly basis, the IPI fell by 0.8% in August after climbing 2.2% in the month before. The decrease was pulled down by mining (Aug: -0.6%; Jul: 1.9%) and manufacturing sector (Aug: -1.0%; Jul: 1.8%). In contrast, electricity production rose slightly to 0.6% in August after significantly expanded by 6.8% in July.

Cumulatively, IPI grew by 3.1% in the first eight months of 2018 from 4.6% in the same period last year. The modest growth was due to the slower production in manufacturing sector (8M2018: 4.9%; 8M2017: 6.5%) as well as a decline in output produced by mining sector (8M2018: -2.4%; 8M2017: 0.2%). However, electricity index jumped to 3.9% from 2.0% between January and August this year.

Source: BIMB Securities Research - 12 Oct 2018