Malaysia's manufacturing sector continues to grow

  • Business
  • Friday, 12 May 2017

Higher output: A man works at a production line of a rubber gloves factory in Klang, The industrial production index expanded by 4.6 in March compared to the same month a year ago.

PETALING JAYA: Provisional data for March from the Statistics Department show that Malaysia’s manufacturing sector continues to grow, with sales jumping 13.6% to RM65.9bil compared to the same month a year ago.

Electrical and electronic (E&E) products; petroleum, chemical, rubber and plastic products; as well as non-metalic mineral products, basic metal and fabricated metal sales contributed to the significant increase in sales value. Together, these products contributed to four-fifths of the manufacturcing sector’s sales value.

Data also showed a 2.1% increase in the number of employees in the sector for the month of March, while salaries and wages increased 7.8% to RM3.45bil.

Meanwhile, the industrial production index (IPI), which measures factory output, expanded by 4.6% in March compared to the same month a year ago supported by growth in the manufacturing and mining indices. The electricity index saw a marginal decline.

Economists who were surveyed before the release of the March data expected a 4.8% growth in the IPI. AllianceDBS Research chief economist Manokaran Mottain expected steady factory output on the strong export trend seen in the first quarter, especially from E&E shipments.

He noted in a report that these shipments would support the manufacturing sector’s growth, and that would ensure steady factory output growth in the coming months.

Manokaran pointed out that strong global demand has also offset weak domestic demand, and that has had a positive impact on the April manufacturing purchasing managers’ index (PMI), which breached the 50-level, indicating an expansion of new orders after 24 consecutive months of contraction.

“Globally, selected leading indicators suggest that the rebound in global demand will continue. Manufacturing PMIs in the US, China and Singapore have been expansionary since the start of the year,” he said, reckoning that the strong manufacturing sector performance in the first quarter could have pushed economic growth to 4.7% from 4.5% in the fourth quarter of last year.

However, for the whole of 2017, Manokaran has maintained economic growth at 4.4%.

Nomura senior economist Euben Paracuelles said the pick-up in factory output growth and the surge in crude palm oil production would support economic growth in the first quarter and offset the mining sector growth slowdown.

He estimated a 5.2% growth for the econony in the first quarter, which would support the investment bank’s full-year forecast of a 4.8% growth for the economy, at the top end of Bank Negara’s estimates of 4.3% to 4.8%.

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