MANUFACTURING SALES POSTS STRONG GROWTH IN APRIL

KUALA LUMPUR: Manufacturing sector activities are likely to drive the economy in the second quarter of this year, said economists.

The Industrial Production Index (IPI) rose by 4.2 per cent in April supported by strong growth in the manufacturing sector for both domestic and exportoriented products.

The sector also recorded a 15.6 per cent growth in April, the strongest in more than three years. In sales value, it rose to RM60.5 billion compared with RM52.3 billion a year ago.

The Statistics Department said the manufacturing sector growth was led by three major sub-sectors — electrical and electronics (E&E) products (9.7 per cent), food, beverages and tobacco (15.4 per cent) and petroleum, chemical, rubber and plastic products (3.0 per cent).

It said both mining and electricity indices declined by 2.0 and 1.5 per cent, respectively.

In the case of mining, it was due to the 6.6 per cent drop in Crude Oil Index. The Natural Gas Index rose 4.0 per cent.

The huge rise in manufacturing sales value in April was due to the increase in E&E products (17.3 per cent) petroleum, chemical, rubber and plastic products (18.2 per cent) and non-metallic mineral products, basic metal and fabricated metal (12.3 per cent).

These three sub-sectors contributed 80.1 per cent to the manufacturing sector’s sales value.

UOB Bank economist Julia Goh said domestic-oriented manufacturing production had caught up with key sectors like food, beverages and tobacco, transport equipment, and non-metallic monetary products, basic metal and fabricated metal.

Export-oriented sectors were held up mainly by E&E, she added.

“Based on preliminary data, we expect further expansion in agriculture, manufacturing, construction and resilient services activity to offset declines in the mining sector.”

The research house has projected the gross domestic product to grow by 5.0 per cent, from 5.6 per cent in the first quarter.

“The drag on overall IPI was due to decline in mining output amid lower extraction of crude petroleum and natural gas and crude petroleum oils and condensates.”

Petroliam Nasional Bhd (Petronas) also announced in January that it will cut its oil output by up to 20,000 barrels per day to comply with the Organisation of Petroleum Exporting Countries (Opec) and non-Opec agreement.

Alliance Bank said although the IPI came in below expectations, its performance continued to be robust as the three-month moving average was 4.5 per cent in April versus 4.2 per cent in March. Rupa Damodaran