Growth in IPI Supported by Recovery in Output of the Mining Sector

The growth in Malaysia’s industrial production index (IPI) rose from 3.1% yoy in March to 4.0% in April, significantly higher than market expectation of 2.5%. Growth in IPI was supported by recovery in production of the mining sector, which rebounded to 2.3% yoy in April, after falling for three consecutive months. Apart from that, growth in electricity output also improved by 5.8% yoy in April, following a 4.8% increase in March. Growth in manufacturing output remained steady in April and expanded by 4.3% yoy (from 4.1% in March).

The strong turnaround in growth of the mining sector was due to higher output of natural gas, which rose by 6.1% yoy in April (1.4% in March), which helped offset the lower output of crude petroleum in the same month (-1.9% yoy in April vs. a contraction of 2.0% in March).

Better Performance in Output of Export-oriented Industries

As for manufacturing production, the steady growth was supported by healthy performance of the export-oriented industries. Almost all sub-components recorded improvements in April, with higher growth as compared to March except for output of petroleum, chemical, rubber and plastic products, which posted a slightly lower growth of 3.6% yoy (3.7% in March), see Fig 2. Higher output was reflected in production of electrical and electronics (E&E) products, which expanded by 4.1% yoy in April from 2.7% in March, supported by components, such as computer, electronics and optical, electrical equipment and machinery and equipment. Besides that, output of textiles, wearing apparel, leather products and footwear improved to 5.7% yoy in April, following a 4.9% expansion in March. Production of wood products, furniture, paper products and printing also increased to 5.2% yoy in April from 5.0% in March.

However, for the domestic-oriented industries, output of food, beverages and tobacco slowed to 4.2% yoy in April after rising by 6.8% in March. The slower pace of growth was reflected in food products, which slowed to 4.1% yoy in April from 7.0% in March. Meanwhile, output of non-metallic mineral products and basic metal & fabricated metal products rose by 4.0% yoy in April following a 3.5% rise in March.

Source: Affin Hwang Research - 12 Jun 2019