• September IPI recorded another negative growth to -0.5% from -0.3% in August

• Manufacturing component slightly improved

• Mining component saw a YoY decrease of -5.2%

• We revised our 2023F IPI growth to 1.1% from 2.0% on the back of slower-than-anticipated growth in manufacturing output in 3Q23.

OVERVIEW

Malaysia's Industrial Production Index (IPI) declined to -0.5% in September, marking another instance of negative growth following a -0.3% decrease in August. The negative growth was largely driven by lower output from the mining component (-5.2%), although it was partially offset by the manufacturing (0.4%) and electricity (2.5%) sectors. The contraction of IPI was due to subdued domestic business activities in September. The YTD average growth for Malaysia's IPI is currently stands at 9%.

Manufacturing. The manufacturing component experienced a period of growth after three months of contraction. Manufacturing segment growth edged up or by 0.4% in September compared to -0.6% in August as output was supported by better performance from (i) F&B (September: 5%) and (ii) non-metallic products and others (September: 8%).

Mining: In September, the mining sector experienced a significant decrease in production, declining by -5.2% YoY after a 0.1% increase in August. This lower production can be attributed to lower output from both natural gas and petroleum oils & condensate.

Electricity: Electricity component delivered another positive growth of 2.5% in September, compared to 1.9% in August. The expansion in electricity generation during the month was supported by further increase in electricity generation which also in-line with better manufacturing activities.

Source: BIMB Securities Research - 8 Nov 2023