• IPI moderated to 2.5% yoy and contracted 2.8% mom
• Manufacturing production dives to 32-month low since April 2016
• November manufacturing sales at 7-month low
• Productivity eased by 5.6% yoy
• Global semiconductor sales top USD40bn while world manufacturing slows
• Slowdown in global IPI performance
• IPI growth to moderate in 2019

Industrial production increased at modest pace

Malaysia’s industrial production index (IPI) moderated to 2.5% yoy in November. The pace of movement seems to normalise just like month of July to September after surging by 4.3% yoy in October. The modest growth in November was prompted by the sluggish production in manufacturing sector (Nov: 3.6%; Oct: 5.4%), the slowest pace since April 2016 (Apr’16: 2.5%), together with contraction in mining output (Nov: -0.7%; Oct: 1.4%). In contrast, electricity production increased 3.2% yoy in November, higher than 2.8% rise posted in the prior month.

On monthly basis, the IPI declined 2.8% in November after rising by 4.7% in October. The decrease was dragged down by all major sectors. Production from manufacturing, mining and electricity contracted by 3.1%, 1.6% and 3.8% respectively in November. In 2018, this was the second time of contraction from all broad-based sectors after February (Manufacturing: -9.8%; mining: -12.5%; electricity: -8.1%)

Cumulatively, IPI grew by 3.1% in the first eleven months of 2018 from 4.5% in the same period last year. The moderate growth was due to the declining production in mining sector (11M2018: -2.2%; 11M2017: 0.3%) coupled with tapering output from manufacturing sector (11M2018: 4.8%; 11M2017: 6.2%). Meanwhile, electricity index accelerated by 3.8% from 2.5% between January and November this year.

Source: BIMB Securities Research - 14 Jan 2019