• IPI increased by 5.8% yoy but decreased 7.0% mom

• All three sub-indices contributed to the higher production

• Manufacturing production slows down

• Manufacturing sales increased 7.0% yoy but contracted 6.3% mom

• Productivity increased by 5.3% yoy

• Global semiconductor sales drop in February

• Global industrial production hit hard by Covid-19

• Malaysia's industrial production could fell off the cliff as Covid-19 paralyzes activities

IPI growth surges in February

Malaysia’s industrial production index (IPI) surged by 5.8% yoy in February 2020, after a 0.6% rise in January, driven by the increased in all three sub-indices. It was the strongest growth in industrial output since August 2017 (6.8% yoy). The higher IPI growth boosted by low-base effects and the front-loading of output amid fears of global supply-chain disruptions due to the Covid-19 pandemic.

On monthly basis, however, the IPI decreased 7.0% mom in February driven by the contraction in all three index: manufacturing (Feb: -7.1%; Jan: +0.4%;), electricity (Feb: -4.5%; Jan: +2.4%) and mining (Feb: -7.5%; Jan: +0.8%). In a seasonally adjusted terms, IPI grew by 3.2% due to the increase in all indices - electricity index (3.5%), manufacturing index (3.2%) and mining index (3.0%).

The IPI for the period of January to February 2020 recorded a growth of 3.0% (JanFeb 2019: +2.5%) as compared to the same period of the previous year. The increase was contributed by the positive growth in all sectors; manufacturing, electricity and mining with 3.8%, 3.2% and 0.6% respectively.

Source: BIMB Securities Research - 13 Apr 2020