Manufacturers upbeat in Q1

  • Business
  • Wednesday, 16 Apr 2008

MYT 4:01:07 PM

KUALA LUMPUR: Manufacturers were surprisingly upbeat in the January-March period, underpinned by higher sales, production volumes and expected export sales, according to the Malaysian Institute of Economic Research (MIER).

In its Business Conditions Index (BCI) survey report for the first quarter 2008 issued on Wednesday, MIER said the BCI -- which tracks domestic manufacturing activity -- rebounded 14.3 points quarter-on-quarter.

“The rebound, which more than erased the 11.9 points the BCI lost in the previous quarter, also reversed two consecutive quarters of declines. The BCI is also 14.4 points higher year-on-year,” it said.

MIER said all eight components of the BCI were up on-quarter. Sales, production volumes, expected production and expected export sales contributed significantly to the rebound.

The private sector economic think-tank said the capacity utilisation component of the BCI rose 2.3 points while domestic orders; capital investments and export orders were relatively unchanged in Q1.

The sales of manufactured goods component of the BCI in Q1 rose 18 points on-quarter to 70.5 points, while on-year, it was up 19 points.

“There was massive overall increase of 21 percentage points in the percentage of respondents reporting ‘good” first quarter sales,” it said.

The BCI’s new domestic orders component was 0.2 points higher, quarter-on-quarter, to 58.2 points. But on a year-on-year basis, it was 14.4 points higher.

In its report on Consumers Sentiment Index (CSI), the MIER said consumers are “looking calmer lately but cautiously optimistic, yet hopeful”.

In Q1, the CSI fell 13.4 points on-year to 115.4 points, but it was still up 4.7 points on-year. The MIER said as the reading was still above the 100-point threshold, it showed that there was still optimism among consumers.

“Perhaps consumers are watching the economic radar more closely now that prices are higher and the political landscape has altered, or perhaps the lower optimism might also reflect consumer’s placebo feeling more than hard economic reality,” it said.

MIER said the failure of payrolls and take-home pay to grow might be ratting consumers. In Q1, only 24% if the households interviewed enjoyed better finances, down from 28% and 25% in Q4 of 2007 and Q12007 respectively.

Meanwhile, the Automotive Industry Index (AII) showed some optimism at 161.2 points in Q1, up 24.7 points from the 136.5 points in Q4 2007. When compared with Q1 2007, this was a large 97.5 points increase from only 63.7 points in Q1 2007.

MIER said the AII showed the auto industry seemed to have turned the corner, but there were still challenges ion the economic front.

“The spending power of households could suffer from the less encouraging economic prospects and the continuing threats of escalating inflation emanating from higher food prices and elevated oil prices,” it said.

It said the Q1 survey revealed that sentiments in the auto industry had become more upbeats, despite worries about the economy.

The revival in the auto industry in the Q1 was due to a rise in general income, new models at affordable prices and still attractive financing terms, it said.

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