August industrial output up, above forecast

PETALING JAYA: Malaysia’s industrial production index (IPI) increased by 0.3% in August from a year ago, which was higher than a Bloomberg survey of a 0.2% increase.

In a statement yesterday, chief statistician Datuk Seri Mohd Uzir Mahidin (pic below) said the increase in IPI in August was driven by the positive growth of 2.4% in the manufacturing index.

However, the mining index recorded a decline of 6.7% and the electricity index dipped 1.2%.

The manufacturing sector output based on year-on-year (y-o-y) comparison grew 2.4% in August, but at a slower pace compared with an increase of 2.9% in July.

The major sub-sectors contributing to the growth in the manufacturing sector in August were electrical and electronic products (6.9%), transport equipment and other manufacturers (6.9%) and food, beverages and tobacco (4.7%).

As for the mining sector, output dropped 6.7% in August due to the decrease in the crude oil and condensate index (-5%) and natural gas index (-8%).

The electricity sector output decreased 1.2% in August from a year ago.

In a report yesterday, MIDF Research said it foresees the full-year IPI declining by -3.7% this year versus its previous forecast of -5.4%.

“For January to August 2020, the IPI registered an average decline of –6.4% y-o-y.

“Going forward, we expect for industrial production will continue to recover supported by growing domestic spending and increasing trade activities.”

However, it is cautious about the outlook because of the recent decline in Malaysia’s manufacturing purchasing managers’ index or PMI, as manufacturing activities slowed over the past few months.

Moreover, it said the new wave of Covid-19, both locally and abroad, and the geopolitical tension between major trading partners are key downside risks that could affect production activity in the coming months.

“ We are also concerned that domestic sentiment and economic activities could weaken once again if the targeted enhanced MCO introduced in selected areas takes a long time to effectively contain the new wave of Covid-19 cases in Malaysia, ” it added.

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