PETALING JAYA: Malaysia’s industrial production index (IPI) reading in November 2025 suggests resilience in industrial activity despite the figure being slightly lower than consensus expectations.
The IPI remained in expansionary territory in November, rising 4.3% year-on-year (y-o-y) compared to a 6% expansion in October.
The slowdown was primarily driven by softer manufacturing output growth, which eased to 4.9% y-o-y alongside a notable deceleration in mining sector activity to 2.3% y-o-y (October: 5.8%).
Manufacturing accounts for 65.9% of the IPI.
Electricity generation provided a partial offset, strengthening to 2.7% y-o-y.
On a month-on-month (m-o-m) basis, overall industrial activity turned negative, with the IPI contracting by 1.1% after a 2.1% expansion in October, pointing to near-term production normalisation following earlier gains.
“Momentum should hold in the near term, though at a slower pace, as high-frequency indicators remain stable.
“December’s manufacturing purchasing manager index stayed at 50.1 (November: 50.1), signalling expansion for the second straight month, likely reflecting frontloading ahead of the festive holidays,” Kenanga Research wrote in a report.
It maintained its fourth-quarter gross domestic product (GDP) growth forecast at 5%, bringing full-year 2025 GDP growth to 4.8% (2024: 5.1%).
Kenanga Research kept its 4.2% growth forecast for 2026, given global uncertainty and lingering geopolitical risks, but added that there is some upside if the global tech cycle strengthens.
BIMB Research noted that industrial production across Asia exhibited a mixed performance in November, reflecting uneven external demand conditions.
Singapore and Taiwan posted strong expansions of 14.3% and 16.4%, respectively, while growth was more moderate in China (4.8%) and Vietnam (10.8%).
Industrial activity contracted in South Korea (minus 1.4%), Japan (minus 2.1%) and Thailand (minus 4.2%), underscoring the divergence in regional manufacturing cycles amid a challenging global environment.
Furthermore, BIMB Research added that Malaysia’s industrial sector is expected to sustain its recovery, underpinned by firm domestic demand, resilient electrical and electronics exports, and gradually easing external pressures, despite lingering uncertainty surrounding potential US semiconductor tariffs.
“We maintain our IPI growth forecast at 3.7% for 2025, while acknowledging that base effects and production normalisation could result in more moderate growth in 2026.
“While prospective US tariff measures pose risks to external demand, Malaysia’s industrial sector remains well supported by resilient domestic-orientated industries, steady consumer spending, and a robust investment pipeline,” the research house stated.
This is because of continued diversification across products and export markets, combined with strong domestic demand, supportive policies, and deeper regional integration, which is likely to help the sector weather external challenges and sustain momentum in manufacturing and trade.
