TA Sector Research

Malaysian Economy - November Output Gains, But Quarter - to - Date Growth Slows

sectoranalyst
Publish date: Mon, 13 Jan 2025, 10:12 AM

Data Highlights 

  • In November 2024, Malaysia's Industrial Production Index (IPI) recorded a faster increase of 3.6% YoY to 136.5 points, above consensus estimation of 2.5% YoY gain. On a monthly basis, the index increased by 0.5% (Oct24: 1.7% MoM).  
     
  • The manufacturing component, which makes up a substantial 65.9% share of the IPI, increased by 4.2% YoY during the month (1,0% MoM). Notably, the growth in the sector was driven by the steady performance of export-oriented industries, which rose by 5.6% YoY as compared with 3.3% YoY gain previously. Meanwhile domestic-oriented industries rose moderately by 2.6% YoY, slower than October’s 3.3% YoY.
  1. Export-oriented industries – The sub-component growth mostly increase during the month, with only one segment registering a contraction. Specifically, the Manufacture of wearing apparel experienced a decline of 3.7% YoY. On the other hand, the Manufacture of rubber products saw a robust increase of 9.8% YoY. This was followed by 8.8% YoY growth in the Manufacture of computer, electronics and optical products. Additionally, the Manufacture of plastics products and Manufacture of machinery and equipment grew by 8.7% and 7.0% YoY, respectively. 
  2. Domestic-oriented industries - Most products recorded growth performance, including the Manufacture of beverages, Printing and reproduction of recorded media, Manufacture of leather and related products and Manufacture of basic pharmaceuticals, medicinal chemical and botanical products. However, the Manufacture of motor vehicles, trailers, and semi-trailers fell by 8.2% YoY. (See Figure 6) 
  • In accordance with the steady increase in manufacturing output, the sector posted higher sales value of RM161.9bn, a 4.5% YoY increase during the period. The growth was mainly driven by a double-digit increase of 12.3% YoY in the Food, beverages & tobacco sub-sector (Oct24: 11.2% YoY); and enhanced by 7.1% YoY rise in the Electrical & electronics products sub-sector (Oct24: 3.2% YoY). On a MoM basis, the sales value grew by 0.3%.
     
  • The Department of Statistics Malaysia (DOSM) also reported that the labour market maintained its positive momentum, with employment recording steady growth across the nation. Total employment rose by 1.9% YoY, while the number of unemployed individuals declined by 4.0% YoY. DOSM attributed this improvement to a healthier economy, supported by rising tourism-related activities, robust investments, and an expansion in exports. Specifically, in the manufacturing sector, 2.40mn employees were recorded in November 2024, reflecting a 1.0% YoY increase, slightly higher than the 0.9% growth in October 2024. The growth was primarily driven by the Food, Beverages & Tobacco (2.1% YoY), Non-Metallic Mineral Products, Basic Metal & Fabricated Metal Products (1.3% YoY), and Wood, Furniture, Paper Products & Printing (1.0% YoY) sub-sectors.
     
  • Meanwhile, the output in the Mining sector shrank by 0.8% YoY in November 2024 (Oct24: -2.8% YoY). The decline was primarily influenced by Crude Oil & Condensate production, declined by 3.8% YoY (Oct24: -7.5% YoY), but offset by the growth in Natural Gas production (Nov24: 1.2% YoY; Oct24: 0.4% YoY). 
     
  • Meanwhile, the electricity generation grew by 3.9% YoY in November 2024 (Oct24: 1.9%). On a positive note, 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.

Our Thoughts

  • The performance in the first eleven months of 2024 demonstrates resilience, with overall output increasing by 3.7% YoY. This positive trend was primarily driven by robust growth in the electricity sector (11M24: 5.8% YoY), the manufacturing sector (11M24: 4.2% YoY), and the mining sector (11M24: 0.7% YoY).
     
  • As we approach the close of the final quarter of the previous year, we foresee a moderation in overall economic output, largely driven by a slowdown in the manufacturing and electricity sectors. Both sectors registered year-on-year growth rates of 3.9% and 2.9%, respectively, marking a decline from the higher growth rates seen in the third quarter of 2024. This suggests a potential deceleration in GDP expansion, which had been 5.3% YoY in 3Q24. However, there was a noteworthy improvement in the mining sector. While still in negative territory, the contraction narrowed to 1.8% during the OctoberNovember period, a significant improvement from the 5.8% decline observed in 3Q24.
     
  • To obtain a more precise understanding of the actual GDP figure for the final quarter of 2024, which is set to be released in February, we turn our focus to the Advance GDP Estimates due on January 17th. These preliminary figures are anticipated to offer valuable insights into the key drivers of economic growth during this crucial period. We are maintaining our GDP forecast for the fourth quarter at 4.7% YoY, with an overall annual projection of 5.0% for 2024.

Source: TA Research - 13 Jan 2025

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