• IPI moderated to 5.8% yoy in December
• IPI expansion was underpinned by manufacturing and electricity sectors
• Growth of the manufacturing sector moderated to 8.4% in December
• Manufacturing sales increased 15.5% yoy; down 0.4% mom in December
• Productivity went up by 12.4% yoy in December
• Sustained growth in global industrial production
• Industrial production to face headwinds as Omicron could disrupt production

IPI moderated to 5.8% yoy in December

Malaysia’s industrial production index (IPI) moderated to 5.8% yoy in December, down from a 9.4% gain in the previous month. Still, December’s IPI marked the fourth month of expansion and the second-fastest in 7 months. The expansion of IPI was due to sustained domestic and global demand. The expansion in IPI for December 2021 was attributable to the improvement in the index of manufacturing (+8.4%) and electricity (+3.7%). However, mining posted negative growth of -2.5%.

On a monthly basis, the IPI in December expanded by 1.3%, driven by all industrial segments. The on-month expansion was in line with strong global oil prices and resumption economic activities. The sustained growth was seen in mining (+4.1%), electricity (+1.7%), and manufacturing output (+0.5%). In seasonally adjusted terms, IPI in December 2021 contracted by 0.7%. The negative growth was due to the mining index (-1.1%) and manufacturing index (-0.9%) and which outweighed the growth in the electricity index (+0.1%).

The IPI for 4Q 2021 rebounded by 6.9% yoy, reversing a contraction of 1.1% in the previous quarter. This positive growth was attributable to an incline of 9.2% in manufacturing and electricity +4.3% offset a downfall of 0.8% in mining.

The IPI for the full year 2021 recorded a growth of 7.4% compared to the same period of the previous year. This positive growth was driven by an increase of 9.5% in manufacturing, 2.3% in electricity, and 1.5% in mining.

Source: BIMB Securities Research - 9 Feb 2022