PETALING JAYA: The Industrial Production Index (IPI) reading for April shows the economy remains resilient supported by domestic-based and export-oriented industries.
The IPI expanded by 8.2% year-on-year (y-o-y) in April, which was well above the 3.1% growth observed in March and outperformed market consensus expectations of 4.5% expansion.
The primary engine of this growth was the manufacturing sector, which expanded by 8.3%.
Export-oriented clusters expanded by 8.5% while domestic-oriented clusters contributed significantly to this momentum, growing by 8%, data showed.
The mining sector rebounded to 6.8% growth after two months of contraction, primarily fuelled by a 16.6% surge in natural gas production, while electricity output strengthened to a robust 10.5%.
“The strength in April’s IPI data largely reflects ongoing inventory accumulation among manufacturers amid concerns over supply disruptions stemming from the Middle East conflict.
“The stockpiling activities suggest that firms have been proactively mitigating supply risks, consistent with our view that Malaysia’s supply chain resilience remains intact for now,” Apex Securities stated in a report.
The brokerage said this “frontloading” of production is further evidenced by a nominal export surge of nearly 40% in April, particularly in the electrical and electronics subsector, which remained resilient with 12.8% growth.
Apex expects the extension of frontloading activities to support resilient manufacturing production and business activity into the second quarter of 2026.
Domestic demand also remained supportive, with motor vehicle production rebounding by 13.5% due to a favourable shift in holiday timing and more working days compared to the previous year.
Apex expects manufacturing production, which grew at 6.3% year-to-date, to grow at 4.5% y-o-y in 2026 on moderation of the frontloading cycle.
Leading indicators already signal a potential loss of momentum as the S&P Global Malaysia Manufacturing Purchasing Managers’ Index eased to 49.9 in May as export orders declined.
