May IPI decline first in three years


BY DANNY YAP

MALAYSIA'S Industrial Production Index (IPI) for May fell 0.4% to 236.2 from 237.1 in the corresponding month a year earlier and was 0.9% lower than that in April. 

In a statement, the Department of Statistics said the year-on-year decline was due to a 8.1% drop in the mining index from 139.0 to 127.7. 

However, the indices for the electricity sector rose 6% (from 270.0 to 286.3) year-on-year, while the manufacturing index increased by 0.2% (from 264.4 to 264.9). 

The department attributed the month-on-month drop to the lower indices of the mining and manufacturing sectors by 4.5% (April: 133.7) and 0.8% (April: 278.9), respectively. 

In the first five months of the year, the IPI expanded 3.9% to 233.8 from 225.0 in the same period last year. 

The growth was in line with the positive change in the indices of the electricity, manufacturing and mining sector, the department said. 

An economist with Standard Chartered Bank said the decline in IPI was the first in three years, attributing it to lower mining output and the cooling of demand for electronic goods.  

“There's a general slowdown of growth across Asia,” he said, adding that Malaysia, like other Asian electronic exporters, was also facing the crunch in lower demand. 

An economist with Mayban Securities said industrial production in the semiconductor industry did not keep pace with export demand, forcing many manufactures to draw stock from inventory. 

“The manufacturers appeared not to be able to keep up with export demand in terms of production levels,” he said.  

Malaysia's exports growth unexpectedly accelerated to 10.9% in May, lifted by higher oil prices and demand for semiconductors and electronics from the United States.  

A foreign economist based in Singapore said although the IPI for May was weaker than expected, it was “only a temporary setback,” as Malaysia's economy remained resilient.  

For the full report from the Statistics Department click here

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