In­dus­trial out­put up in Au­gust

MIDF Re­search: Ex­ports in Au­gust ex­panded by 21.5%

The Star Malaysia - StarBiz - - Front Page -

PETALING JAYA: In­dus­trial out­put in Au­gust ex­panded at its fastest pace in more than two years, boosted by a sharp in­crease in nat­u­ral gas pro­duc­tion and steady growth in the man­u­fac­tur­ing sec­tor.

“The up­ward trend in the over­all in­dus­trial pro­duc­tion in­dex (IPI) per­for­mance is in tan­dem with the up­beat per­for­mance of ex­ter­nal trade ac­tiv­i­ties which saw ex­ports ex­pand­ing by 21.5% in Au­gust,” MIDF Re­search said.

The firm ex­pects strong global de­mand to keep fac­tory out­put on a steady growth path for the rest of the year.

“The en­cour­ag­ing trend of the IPI growth is ex­pected to con­tinue in the up­com­ing months, given the con­tin­ued ro­bust ex­ter­nal trade per­for­mance and the mod­est in­crease in com­mod­ity prices will boost in­dus­trial ac­tiv­ity in Malaysia,” it said.

The IPI grew 6.8% in Au­gust, the Sta­tis­tics Depart­ment said yes­ter­day, ac­cel­er­at­ing from the 6.1% growth recorded in July.

“In­dus­trial ex­pan­sion in Au­gust was sup­ported by pos­i­tive growth in all in­dices, namely, man­u­fac­tur­ing (7.6%), min­ing (5.3%) and elec­tric­ity (3.0%).

“The min­ing sec­tor’s out­put in­creased strongly by 5.3% com­pared to 0.2% in July, mainly due to an in­crease of 14.6% in the in­dex for nat­u­ral gas. How­ever, the in­dex for crude oil fell by 1.6% in Au­gust,” the Sta­tis­tics Depart­ment said.

De­spite reg­is­ter­ing a pos­i­tive ex­pan­sion in Au­gust, the man­u­fac­tur­ing sec­tor’s growth was mar­gin- ally lower than 8% in July. The sec­tor’s pro­duc­tion mo­men­tum seems to be slightly slow­ing, as the Nikkei Malaysia Man­u­fac­tur­ing Pur­chas­ing Man­agers’ In­dex (PMI) also dropped to 49.9 in Septem­ber from 50.4 a month ear­lier.

This was on the back of re­duced new or­ders in the man­u­fac­tur­ing sec­tor in Septem­ber.

Sim­i­larly, the elec­tric­ity sec­tor also recorded a slower growth in Au­gust, ex­pand­ing by 3% com­pared to 7.9% growth in July.

Fol­low­ing the strong in­dus­trial pro­duc­tion per­for­mance, RHB Re­search has in­di­cated that the coun­try’s gross do­mes­tic prod­uct (GDP) growth may of­fer a sur­prise on the up­side in the third quar­ter.

“The stronger ad­vance in July-Au­gust’s in­dus­trial ac­tiv­i­ties in­di­cates the third-quar­ter’s real GDP growth may sur­prise us on the up­side, which we cur­rently project to ex­pand by 5.3% year-on-year (y-o-y) as com­pared to 5.8% in the sec­ond quar­ter.

“On a cu­mu­la­tive ba­sis, Malaysia’s IPI grew by 4.8% y-o-y in the Jan­uary-Au­gust pe­riod, strength­en­ing from the 3.5% recorded in the cor­re­spond­ing pe­riod last year.

“We ex­pect Malaysia’s real GDP to grow by 5.3% in 2017, be­fore inch­ing up to 5.4% for 2018 from 4.2% in 2016. The stronger growth in 2018 would likely be sup­ported by a stronger in­crease in ex­ports, pickup in do­mes­tic de­mand and mod­est in­crease in pub­lic spend­ing and in­vest­ments.”

Mean­while, Citi Re­search has pro­jected that the coun­try’s GDP growth in the third quar­ter may even ex­ceed 6%, given the stronger in­dus­trial pro­duc­tion in Au­gust.

“Along­side pos­i­tive in­com­ing data from agri­cul­ture and whole­sale or re­tail sales, GDP growth in the third quar­ter may be on track to ex­ceed 6%.

“With a GDP growth of 5.7% in the first half, risks to our base­line 2017 fore­cast of 5.5% are clearly tilted to­wards the up­side. We would not be sur­prised if the Oct 27 bud­get an­nounce­ment raises 2017 fore­casts to 5%-6% from 4%-5% pre­vi­ously,” said the re­search house.

By GANESHWARAN KANA ganeshwaran@thes­ Gas boost: Aerial view of Petronas’ re­gas­si­fi­ca­tion ter­mi­nal off Me­laka. Au­gust out­put was boosted by a sharp in­crease in nat­u­ral gas pro­duc­tion.

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