• The Department of Statistics Malaysia (DOSM) nearly finished announcing its macroeconomic indicators yesterday, providing us with a glimpse into the potential economic performance for the second quarter and meeting our advanced estimates as well as those of DOSM. Yesterday, DOSM released the Volume Index of Services, which represents services in Real GDP, and the Distributive Trade Index which represents Personal Expenditure in the demand side.

• Namely, the Volume Index of Services continued to expand at a rate of 6.7% YoY to 1502.2 points in the second quarter quarter of 2024 (1Q24: 4.7% YoY). On a quarterly basis, the index of services exhibited a growth of 1.2% QoQ (1Q24: 1.3% QoQ).

• The Wholesale & Retail Trade, Food & Beverages & Accommodation rose by 5.1% YoY, vs 3.9% YoY growth previously. This is followed by Finance, Real Estate and Professional (2Q24: 10.3% YoY; 1Q24: 3.7% YoY), Others Services (2Q24: 7.4% YoY; 1Q24: 6.8% YoY). Meanwhile, Information & Communication and Transportation & Storage segment moderated slightly by 5.9% during the quarter, as compared with 6.0% YoY increase previously.

• At the same time, Data from DOSM also revealed that sales value of Distributive Trade Index (DTI) recorded RM146.0bn in June 2024, grew 5.4% YoY. The growth was contributed by all sub-sectors, namely retail trade 7.9% YoY, wholesale trade 4.0% YoY, and motor vehicles 2.0 %. Meanwhile, for MoM comparison, sales value decreased -1.3%. The QoQ contraction was probably due to the hike in diesel price which resulted in lower purchasing power for some consumers. In terms of volume index, The DTI registered a growth of 4.5% YoY to record 155.5 points. The increase was supported by Retail trade 6.3%, Wholesale trade 3.2%, and Motor vehicles 1.2% YoY. On a quarterly comparison, the DTI recorded a better growth of 4.9% YoY in 2Q24, as compared with 3.7% in the previous quarter.

• With that, we anticipate that the services sector to grow by 6.3% YoY, compared to DOSM's projection of 5.8%. Meanwhile, we also believe that personal spending in the demand side to record a better growth of probably around 6% YoY in 2Q24, as compared with 4.2% YoY observed in the previous quarter.

• We maintain our view and project overall GDP to increase by 5.5% YoY in 2Q24 (2024E: 4.7%). The DOSM will release the official real GDP data on 16th August.

Source: TA Research - 9 Aug 2024