• IPI drops 4.9% yoy in March

• 1Q 2020 IPI grew 0.4%

• All three sub-indices contributed to the decline in production

• Manufacturing sales dropped in March

• Productivity decreased 4.1% yoy

• Global semiconductor sales decreased 3.6% in 1Q 2020

• Global industrial production pressured by Covid-19 lockdowns

• Industrial production to deteriorate in the immediate term reflecting adverse spill overs from the health crisis

IPI drops 4.9% yoy in March

Malaysia's industrial production index fell 4.9% yoy, the sharpest decline in nearly a decade, as curbs imposed to contain the coronavirus pandemic severely disrupted activity. The drop was the steepest since May 2011, when it declined 5.2%. In February, the index had risen 5.8%, fastest in more than two years. All three main sectors tracked by the index posted declines in March, with electricity output falling 7% yoy.

On monthly basis, the IPI decreased at a slower pace of -0.3% as compared to -6.7% mom in February. Manufacturing (Mar: -1.1%; Feb: -6.6%; Jan: +0.4%;) and electricity (Mar: -0.8%; Feb: -4.5%; Jan: +2.4%) declined at marginal pace whilst mining (Mar: Feb: -7.5%; Jan: +0.8%) recovered to positive growth. In a seasonally adjusted terms, IPI registered a negative growth of 8.9% due to the decrease in all indices - mining (- 5.8%), manufacturing (-9.6%) and electricity (-12.3%). The IPI for 1Q 2020 recorded a growth of 0.4% as compared to the same period of the previous year. This positive growth was contributed by the increase of 1.3% in manufacturing. Meanwhile, electricity and mining recorded a reduction of 0.4% and 1.8% respectively.

Source: BIMB Securities Research - 12 May 2020