• IPI expanded by 3.4% yoy and rebounded by 1.5% mom

• Healthier production from manufacturing and mining sector

• December manufacturing sales growth remain modest

• Productivity increased by 5.7% yoy

• Global semiconductor sales increased 13.7% in 2018

• Growth in global IPI remains slow

• Strong IPI growth hints improvement in 4Q18 GDP growth

Industrial production improved in December

Malaysia’s industrial production index (IPI) expanded by 3.4% yoy in December. The improvement in December was supported by all major sectors especially manufacturing (Dec: 4.4%; Nov: 3.7%) and mining sector (Dec: 1.0%; Nov: -0.7%). Whereas, electricity index eased by 2.7% yoy in December from 3.2% in the previous month.

On monthly basis, the IPI rebounded by 1.5% in December after falling by 2.7% in November. The recovery can be seen in all major sectors as the production from manufacturing, mining and electricity bounced back by 0.5%, 4.6% and 1.2% respectively in December.

Meanwhile, IPI growth in 4Q18 surged by 3.5% yoy from 2.4% yoy registered in 3Q18. The rally in mining production was the anchor of the growth as it improved to 0.6% yoy after a sharp decline of 5.6% in the previous quarter. Nonetheless, the output from manufacturing and electricity tapered off by 4.5% yoy (3Q18: 4.8%) and 2.9% yoy (3Q18: 4.2%) respectively in 4Q18.

For the full year of 2018, IPI moderated to 3.1% versus 4.3% in 2017. The slowdown was mainly dragged by the falling production in mining sector (2018: -1.9%; 2017: - 0.1%) as well as subdued manufacturing output (2018: 4.8%; 2017: -6.1%). In contrast, electricity production improved by 3.7% in 2018 from 2.6% registered in the previous year.

Source: BIMB Securities Research - 12 Feb 2019