Data Highlights

• Malaysia Industrial Production Index (IPI) rebounded by 2.7% YoY to 133.3 points. This increase was better than consensus estimate of 2.4% YoY and improved further from the 0.5% declined observed in the previous month.

• The manufacturing component, which makes up a substantial 65.9% share of the IPI, rose by 0.9% (with a MoM decrease of 1.3%). This is also better than 0.4% YoY gain reported in the previous reporting period.

• Notably, the export-oriented industry continued to drag the overall performance during the month with a decline of 1.5% YoY. Nonetheless, the performance was offset by resilient domestic-oriented industries, which continued to show growth.
  • Export-oriented industries in the country recorded a YoY decline of 1.5%, slightly better than the 2.0% YoY decline registered previously. The drop was primarily driven by numerous sectors, including the Manufacture of coke and refined petroleum products, Manufacture of furniture, Manufacture of rubber textiles, Manufacture of electrical equipment and Manufacture of machinery and equipment. The weak performance of these industries is in tandem with the recent poor trade performance as total exports contracted by 4.4% YoY during the month to RM126.19bn.
  • Domestic-oriented industries, meanwhile, increased by 6.7% YoY, vs 5.8% annual increase previously. Namely, most of the products registered a growth, except manufacture of basic pharmaceuticals, medicinal chemical and botanical products which declined by 2.2% YoY. (See Figure 6).

• In accordance with the increase in manufacturing output on an annual basis, the sector posted a higher sales value of RM156.68bn in the latest reporting period, denoting a lower YoY decrease of 1.4% (Sept23: -2.4% YoY). On a monthly basis, the sales value reduced by RM1.08bn from September’s RM157.76bn. The contraction in sales value was attributed by the persistent decline in the Petroleum, chemical, rubber & plastic products sub-sector by 9.5% YoY; and the Electrical & electronics products sub-sector which fell by 2.7%.

• In the meantime, the mining output, which constitutes 25.1% of the total IPI, surged by 8.7% YoY in October 2023 (Sept 23: -0.5% YoY). The details revealed that the oil and natural gas output rebounded by 10.2% and 7.6% YoY as compared with the previous month’s -1.4% and - 7.8% YoY, respectively. On a MoM basis, this segment posted a robust increase of 16.7%. The mining sector encompasses the production of crude oil and natural gas, which accounted for 83.1% of the gross output value and 89.6% of the census value-added of the mining sector in 2015.

• The electricity index, which represents 6.6% of the total IPI, grew by 5.8% YoY (5.3% MoM) during the month (Aug23: 1.9% YoY). Moreover, the increase indicates an increasing momentum in the operations of the businesses. To note, the electricity index refers to the generation, collection, transmission, or distribution of electric energy to households, industrial, or commercial users.

Source: TA Research - 12 Dec 2023