Malaysia’s September IPI up 1.7% YoY

By SHAZNI ONG / Pic By MUHD AMIN NAHARUL

MALAYSIA’S industrial production index (IPI) rose 1.7% year-on-year (YoY) in September 2019, but slowed compared to a 1.9% growth seen last month, according to government statistics.

The expansion was driven by an increase in the electricity (4.1%) and manufacturing (2.5%) indices, data from the Department of Statistics Malaysia (DoSM) showed.

“The electricity sector’s output increased by 4.1% in September 2019 compared to the same month of the previous year. Meanwhile, the natural gas index increased by 1.1%.

“YoY, the manufacturing sector’s output rose by 2.5% in September 2019 after recording a growth of 3.6% in August 2019,” DoSM chief statistician Datuk Seri Dr Mohd Uzir Mahidin (picture) said in a statement yesterday.

Major subsectors contributing to the increase were transport equipment and other manufacturers (6.3%), non-metallic mineral products, basic metal and fabricated metal products (3.8%), and petroleum, chemical, rubber and plastic products (2.1%).

However, the mining index declined 1.6% in September 2019 against last year, due to the 4.7% decrease in the crude oil and condensate index.

The increase in the overall IPI was helped by the manufacturing index (up 3.4%) and the electricity index (up 2.1%), while the mining index declined to 4.7%, Mohd Uzir said.

Maybank Investment Bank Bhd (Maybank IB) in a note yesterday said the output data points to tapering in GDP growth.

“For mining output, crude oil output fell amid Malaysia’s commitment to the OPEC/non-OPEC output cut and weakness in crude petroleum export volume.

“Whereas, liquefied natural gas (LNG) export volume accelerated, driven mainly by increased supply to China as US-China trade war resulted in trade diversion/substitution amid a slump in China imports of US LNG,” the research firm said.

The manufacturing slowdown was consistent with Malaysia’s manufacturing Purchasing Managers’ Index (PMI), which fell to 47.6 in the third quarter of 2019 (3Q19) versus 48.7 in 2Q19.

“Key drags on manufacturing output last quarter were electrical and electronics (E&E) on contraction in printed circuit boards and deceleration of consumer electronics; and food, beverages and tobacco as a result of the declining output of refined palm oil,” Maybank IB said.

Imports of capital and consumption goods slumped further and deeper, suggesting weaker domestic demand last quarter, it added.

“However, net external demand growth should be firmer, given the surge in trade surplus. Domestic demand is 92% of GDP versus net external demand’s 8% share,” it said.

Separately, DoSM said Malaysia’s manufacturing sales grew 2.9% in September 2019 to register at RM72.9 billion compared to RM70.8 billion last year.

This was driven by the increase in non-metallic mineral products, basic metal and fabricated metal products (6.4%), petroleum, chemical, rubber and plastic products (1.4%), and E&E products (1.3%).

Total employees engaged in the manufacturing sector in September 2019 also rose 1.2% or by 12,887 persons to 1.09 million persons compared to 1.07 million persons in September 2018.

Salaries and wages paid amounted to RM4.01 billion, went up 2.8% or RM108 million in September 2019 against the same month of the preceding year.

Meanwhile, the value of construction work done in the 3Q19 contracted 0.6% YoY to RM36.1 billion.