• IPI dropped -0.7% yoy in August
• IPI posted negative growth in all sub-sectors except manufacturing
• Production of the manufacturing sector expanded in August
• Manufacturing sales increased 6.8% yoy; up 5.5% mom in August
• Productivity increased 5.7% yoy in August
• Global semiconductor sales remained strong in August up 29.7% yoy
• Global industrial production remains constrained
• Recovery in IPI to continue but uneven across industrial segment

IPI dropped -0.7% yoy in August

Malaysia’s industrial production index (IPI) decreased marginally -0.7% yoy in August following a 5.1% contraction in July 2021. August’s IPI marked the second straights month of contraction in industrial output, albeit at a moderated pace. The contraction in IPI was due to supply chain disruptions and prolonged strict restrictions led to industrial output producing at a suboptimal level. The decline in August 2021 was caused by the decrease in the index of electricity (-4.8%) and mining (-4.2%) which outweighed the increase in manufacturing (+0.6%)

On a monthly basis, the IPI in August expanded at a firm pace of 3.2%, driven by the manufacturing and electricity as more economic sectors opened up. The on-month recovery was in line with the transition phase of the National Recovery Plan (NRP) as the manufacturing sector was supported by the export-oriented industries. The growth in both manufacturing output (+5.3%) and electricity (+2.8%) offset the decrease in mining (-4.5%). In seasonally adjusted terms, IPI in August 2021 rose by 3.2%. The positive growth was due to the manufacturing index (5.3%) and electricity index (+2.3%) which offset the decline in mining index (-3.8%).

The IPI for the period of January to August 2021 recorded a growth of 8.2% compared to the same period of the previous year. This positive growth was driven by an increase of 10.4% in manufacturing, 3.0% in mining, and 1.7% in electricity.

Source: BIMB Securities Research - 13 Oct 2021