August IPI growth beats expectations

> Industrial production index jumps 6.8% year on year, riding on manufacturing sector’s performance

PETALING JAYA: Malaysia’s industrial production index (IPI) rose by 6.8% in August 2017 from a year ago, beating market expectations of 5.8%, underpinned by strong growth in the manufacturing sector.

The Statistics Department said in a statement yesterday the increase is attributed to positive growth in all indices, namely manufacturing (7.6%), mining (5.3%) and electricity (3%).

The manufacturing sector output was driven by strong growth in major subsectors – petroleum, chemical, rubber and plastic products (6.9%); electrical and electronics products (8.6%) and food, beverages and tobacco products (9.4%).

The mining sector output grew 5.3% in August 2017 due to the increase in the natural gas index by 14.6%. However, the crude oil index declined by 1.6%.

The electricity sector’s output increased 3% in August 2017 on yearly basis, it added.

Meanwhile, the department said the manufacturing sector recorded RM65.1 billion of sales in August 2017, an increase of 16.5% from the RM55.9 billion a year ago.

The total number of employees in the manufacturing sector in August 2017 was 1.05 million, a growth of 2.6% or 26,391 persons as compared to 1.03 million in August 2016.

MIDF Research, in a separate note, attributed the upward trend in overall IPI performance to upbeat performance of external trade activities, which have seen exports expanding 21.5% year on year in August.

The research house said the growth trend was in line with the uptick manufacturing Purchasing Managers’ Index (PMI) figure in August which surpassed the 50-point expansion line.

“We opine continuous upbeat momentum in global demand remains as key driver in boosting up Malaysia’s industrial activities.”

Moreover, MIDF Research said it expects the encouraging trend of IPI growth to continue for the upcoming months given that robust external trade performance continues and modest increase in commodity price will boost industrial activity in Malaysia.

Due to strong export performances for the past eight months of 2017 and optimistic business confidences, MIDF Research said it believes the upbeat momentum will remain, and thus cause positive spillover effects to the country’s industrial production this year.

“Hence, based on solid uptrend in trade activities and steady domestic consumption, we expect industrial production growth to hit 5.3% in 2017,” it added.