Data Highlights

• Malaysia’s Industrial Production Index (IPI) experienced a slight contraction of 0.1% YoY to 130.1 points. This is below the anticipated growth of 0.7% YoY and the 0.6% YoY expansion observed in the previous month. On a monthly basis, it fell 1.3%.

• The manufacturing component, which makes up a substantial 65.9% share of the IPI, declined further by 1.4% YoY during the month (with a MoM decrease of 2.6%). Notably, the exportoriented industry continued to drag the overall performance during the month with a larger decline. In addition, the performance was influenced by slower performance of domesticoriented industries, which moderated during the month.
   
  • Export-oriented industries in the country recorded a YoY decline of 4.1%, weaker than the 2.7% YoY contraction registered previously. The drop was primarily driven by numerous sectors, including the Manufacture of computer, electronics and optical products, Manufacture of textiles, Manufacture of coke and refined petroleum products and Manufacture of rubber products. The performance of these industries was in tandem with the recent poor trade performance as total exports contracted by 10% YoY during the month to RM118.45bn.
     
  • Domestic-oriented industries moderated by 4.2% 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 0.2% YoY as well as Manufacture of other transport equipment (-0.4% YoY) and Manufacture of motor vehicles, trailers and semi-trailers (-2.5% YoY)

• In accordance with the decrease in manufacturing output, the sector posted a lower sales value of RM149.89bn in the latest reporting period, denoting a higher YoY decrease of 4.2% (Nov23: -2.6% YoY). The contraction in sales value was due to the continuous decline in the Petroleum, chemical, rubber & plastic products sub-sector since June 2023, which registered a contraction 13.6% YoY in December 2023. Moreover, the Electrical & electronics products sub-sector dropped by 4.6% YoY while the Food, beverages & tobacco sub-sector slipped by 2.6% YoY. As compared to the preceding month, the sales value dropped by 3.3% (Nov23: RM155.0bn).

• In the meantime, the mining output, which constitutes 25.1% of the total IPI, rose by 2.6% YoY in December 2023 (Nov23: 1.9% YoY). The details revealed that the oil and natural gas output increased by 1.6% and 5.0% YoY, respectively as compared with the previous month’s 2.1% and 1.7% YoY, respectively. On a MoM basis, this segment rose by 2.8%. 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 4.6% YoY (1.1% MoM) during the month (Nov23: 4.3% 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 - 8 Feb 2024