• Malaysia's IPI rose by 5.0%, marking six consecutive months of growth.
• Manufacturing sector's sales value up by 5.9%.
• Manufacturing sector employment rose by 1.0%.
• Manufacturing sector upswing is expected to continue in 2H24.

Malaysia's Industrial Production Index (IPI) increased by 5.0% in June 2024 (May: 2.4%), marking six consecutive months of positive momentum. Manufacturing output led the growth with a 5.2% increase (May: 4.6%), while the Mining sector saw a turnaround with a 4.9% rise (May: -6.9%). The Electricity sector also grew by 3.5% (May: 4.5%). Compared to the previous month, the IPI rose by 4.8%, compared to 3.5% in May 2024.

The Manufacturing sector grew by 5.2%, driven by a 5.4% increase in export oriented industries, the highest growth since September 2022. Key contributors included the Manufacture of coke & refined petroleum products, which surged to 12.5% (May: -5.5%), and the Manufacture of vegetable & animal oils & fats, which accelerated to 11.0% (May: 4.8%). The Manufacture of computer, electronics & optical products also grew by 4.9% (May: 8.4%). This growth aligned with a 6.4% increase in manufactured goods exports and an 11.8% rise in export-oriented industries MoM (May: 9.0%).

Meanwhile, domestic-oriented industries grew modestly by 4.6% in June 2024 (May: 6.4%). This slowdown was due to a 10.7% decline in the Manufacture of motor vehicles, trailers & semi-trailers (May: 10.3%) and a decrease in the Manufacture of food processing products to 3.9% (May: 4.3%). However, growth in construction related manufacturing cushioned the impact, with increases in the Manufacture of fabricated metal products (12.6%), other non-metallic mineral products (8.9%), and basic metals (8.0%). Domestic-oriented industries decreased by 5.4% MoM, a contrast to the 2.3% growth recorded in the previous month.

In June 2024, the Mining sector's output increased by 4.9%, reversing the previous month's 6.9% decline. This growth was fuelled by a 6.0% rebound in Natural Gas production (May: 10.3%) and a 3.4% increase in Crude Oil & Condensate production (May: -1.9%). Compared to May, the Mining index rose by 4.0%.

Meanwhile, Electricity generation grew by 3.5% in June (May: 4.5%). On a MoM basis, the Electricity index fell by 6.2% (May: 5.7%).

In Q2 2024, the IPI rose by 4.5%, up from 3.3% in Q1, driven by a 4.9% increase in Manufacturing (Q1: 2.1%). The Mining sector grew by 2.4% (Q1: 5.9%), while Electricity increased by 5.3% (Q1: 9.1%). Compared to Q1, the IPI fell by 1.2% due to weaker Mining performance. For H1 2024, the IPI was up 3.9% YoY, supported by Manufacturing (3.5%), Mining (4.2%), and Electricity (7.1%) indices.

The Manufacturing sector's sales value continued its positive trend, rising by 5.9% to RM156.1bn (May: 5.5%). This growth was led by the E&E products sub-sector, which increased by 7.1% (May: 12.2%). Other contributing sectors included Food, Beverages & Tobacco (+8.6%) and Non-metallic Mineral Products, Basic Metals & Fabricated Metal Products (+11.1%). On MoM basis, the sales value grew by 0.8% from RM154.9bn in May 2024.

Sales for export-oriented industries, which make up 73.1% of the sector, grew by 6.0% (May: 4.6%). Key contributors included the Manufacture of Computer, Electronics & Optical Products (+8.8%) and the Manufacture of Vegetable & Animal Oils & Fats (+10.9%). Additionally, the Manufacture of Coke & Refined Petroleum Products saw a rebound to 1.6% (May: -17.6%). On MoM basis, sales for export-oriented industries increased by 3.9%, compared to 2.5% in May 2024.

In the meantime, the sales value of domestic-oriented industries grew modestly by 5.5% (May: 7.9%). This was impacted by a 5.2% decline in the Manufacture of Motor Vehicles, Trailers & Semi-Trailers. However, growth was supported by the Manufacture of Fabricated Metal Products (+13.5%), Food Processing Products (+5.2%), and Basic Metals (+12.3%). On MoM basis, the sales value of domestic-oriented industries continued to decline, registering -6.7% in June 2024 compared to -2.2% in May 2024.

Consistent growth in manufacturing employment. The Manufacturing sector employed 2.37mn workers in June, marking a 1.0% increase (May: 0.9%). The rise was mainly seen in the Food, Beverages & Tobacco sector (4.0%) and the Non-metallic Mineral Products, Basic Metal & Fabricated Metal Products sector (2.3%). Conversely, employment in the Manufacture of Computer, Electronics & Optical Products fell by 0.9% (May 2024: -1.1%). Compared to the previous month, the number of employees in this sector edged down by 0.3% (May 2024: 0.2%).

In Q2 2024, Manufacturing sector sales hit RM464.2bn, up 5.7% from Q1’s 1.8% growth. Key drivers included Electrical & electronics products (7.3%) and Food, beverages & tobacco (8.2%). Employee numbers and total wages increased by 1.0% and 1.4%, respectively. For H1 2024, sales reached RM921.5bn, a 3.7% rise from H1 2023. The workforce grew by 1.0% to 2.37mn, with wages up 1.3% to RM49.3bn. Sales per employee rose by 2.7% to RM388,904.

Source: BIMB Securities Research - 12 Aug 2024