[KUALA LUMPUR] Malaysia’s industrial production index (IPI) rose 3.1 per cent in February from the year before, boosted by higher output from the mining and electricity sectors, said the Department of Statistics Malaysia (DOSM) on Monday (Apr 8).

The growth, although lower than 4.3 per cent in January, exceeded the 1.5 per cent growth forecast by a group of economists in a recent Reuters poll.

A report by DOSM showed that the output from the mining sector accelerated by 8.1 per cent year on year (yoy) in February, higher than the 5 per cent yoy growth in January, buoyed by the double-digit growth in the production of natural gas and crude oil.

The manufacturing sector, however, grew more slowly in February – by 1.2 per cent, down from the 3.7 per cent growth in January. This was mainly dragged down by lower output of textiles, leather and footwear products, as well as food and beverages.

Nevertheless, output of non-metallic minerals, basic metals and fabricated metal products, as well as the transport equipment segment, continues to expand, offsetting the slower growth in other segments.

The electricity sector output expanded by 10.9 per cent in February, up from the 8.3 per cent growth in the previous month; this was driven by increased output from the mining and manufacturing sectors.

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Economists said the slower growth in February could have come from seasonal factors. There were fewer working days during the Chinese New Year break, for instance, which did not reflect Malaysia’s industrial production activities.

RHB Research economist Chin Yee Sian and associate research analyst Wong Xian Yong are maintaining an optimistic view of the country’s manufacturing sector on the back of a rosier global economy outlook this year.

They wrote in a note on Monday: “Malaysia will benefit from the ongoing recovery of the global economy, led by the improvement in exports by regional economies, China’s economic recovery and resilient economic data from the United States.”

The positive prospects of export-oriented industries, such as electronics, petroleum and petroleum-based products, as well as metal goods production, are expected to continue brightening, driven by a re-acceleration in the global technology cycle and higher demand from major trade partners, added Chin and Wong.

The S&P Global Malaysia Manufacturing Purchasing Managers’ Index (PMI) improved to 49.5 in February from 49.0 in January, marking the highest reading since the current sequence of declines began in September 2022.

Although new orders and production levels grew at a slower pace, FocusEconomics observed that the country’s manufacturing sector edged closer to stabilisation. Additionally, purchasing activity, employment levels and backlogs of work in Malaysia were broadly stable.

In February, the output from domestic-oriented industries rose by 3.8 per cent (lower than the 8 per cent yoy growth in January), but export-oriented industries declined slightly by 0.1 per cent, reversing a 1.6 per cent yoy growth the previous month.

For the first two months of 2024, Malaysia’s IPI expanded by 3.7 per cent, compared to 2.4 per cent during the same period last year.