• July manufacturing sales value up 23.8% YoY to RM148.4bn

• Employment in the manufacturing sector increased

• Salaries & wages paid rose by 7.1% YoY

• Productivity went up by 18.9% YoY in July

• Manufacturing sales to continue growing but headwinds remain in the horizon

Malaysia’s manufacturing sales remained robust as the value of manufacturing sales in July 2022 grew by 23.8% to RM148.4bn as compared to RM119.9bn 6reported a year ago. This marked 26th consecutive months of expansion in manufacturing sales. The year-on-year increment in July was driven by Electrical & Electronics Products (Jul: 26.1%; Jun: 25.4%), Petroleum, Chemical, Rubber & Plastic Products (Jul: 19.1%; Jun: 18.8%) and Non-Metallic Mineral Products, Basic Metal & Fabricated Metal Products (Jul: 44.2%; Jun: 43.2%).

Based on month-on-month growth, the sales value depreciated by 3.3% (Jun: RM153.5bn) while in a seasonally adjusted terms, the sales value decreased by 6.8%.

Likewise, with higher sales, employment in the manufacturing sector increased with the total employees engaged in the manufacturing sector in July 2022 was 2,300,906 persons, an increase of 4.1% as compared to 2,210,084 persons in July 2021. The increment was contributed by the E&E sector (6.7%), wood, furniture, paper products and printing (5.1%) and transport equipment and other manufacture products (5.7%). On a monthly basis, the number of employees increased by 0.1% as compared to 2,297,905 persons registered in the preceding month.

Salaries & wages paid amounted to RM7.7bn, rose by 7.1% YoY or RM513.8mn in July 2022. Meanwhile, salaries & wages paid in July 2022 less by 1.4% MoM (RM107.4mn). Meanwhile, the average salaries & wages paid per employee in July 2022 was RM3,350, increased by 2.9% YoY but decreased 1.5% MoM.

Productivity or sales value per employee in July 2022 increased by 18.9% YoY to register RM64,510. Meanwhile, on month-on-month basis, the average sales value per employee shrank by 3.4%.

Sales value of the manufacturing sector soared in the first seven months. The sales value of the manufacturing sector in the period January to July 2022 registered an increase of 16.3% YoY to RM1,007.2bn. At the same time, the number of employees engaged during the period rose by 4.1% YoY to register 2,300,906 persons while salaries & wages paid went up by 5.0% YoY to RM54.5bn. Meanwhile, the sales value per employee during the reference period rose by 11.7% YoY to record RM437,749.

Outlook

The growing manufacturing sales generally reflect the positive effect of economic reopening, increased consumer spending as well as improved business activities. We anticipate the outlook for manufacturing sales will remain positive as growth momentum, especially in the domestic economy, improved further in the latter part of the year. Overall, with sales continued to grow for the 26th month in a row, this shows continued improvement in demand and consumption activity. The results showed volume expansion from improved productivity and increased demand as economies reopened. Barring a sharp deterioration in the global economic outlook, we believe manufacturers will continue to ride on volume expansion as the world comes out the other end of the pandemic. We foresee sales will continue to grow as companies gain from increased spending and further reopening of the economy.

Source: BIMB Securities Research - 11 Sept 2022