Malaysia’s September industrial production expands 2.3%, but misses forecast
Economists had anticipated a 3.7% increase; it is also slower than August’s growth of 4.1% on year
[KUALA LUMPUR] Malaysia’s industrial production grew at a slower pace of 2.3 per cent year on year in September, falling short of economists’ expectations, according to a report by the Department of Statistics Malaysia on Friday (Nov 8).
In a recent Reuters poll, economists had anticipated a 3.7 per cent increase in factory output. The final figure is also slower than the previous month’s growth of 4.1 per cent year on year.
For the first nine months of 2024, Malaysia’s industrial production increased by 3.9 per cent year on year, as compared with a modest 0.7 per cent expansion during the same period last year.
The manufacturing output remained the primary driver of this growth, achieving a year-on-year growth of 3.2 per cent in September, although this is slower than August’s 6.5 per cent rise.
Manufacturing leads the expansion
The growth in the manufacturing sector was supported by higher output in several categories, including electrical and electronic products, non-metallic mineral products, basic metal and fabricated metal products, as well as food, beverages and tobacco products.
The electricity sector, meanwhile, recorded a year-on-year growth of 3.9 per cent in September, down from 4.2 per cent in August.
In contrast, the mining sector continued its decline for the third consecutive month, with production decreasing by 2.2 per cent year on year. This was, however, an improvement from August’s 6.4 per cent drop. The decline was attributed to reduced output from crude oil and condensate production.
MIDF Research noted that the slower industrial production growth reflected the continued drag from reduced mining output and slower rise in both manufacturing and electricity output.
“Sustained growth in electricity indicates rising energy demand for the 17th consecutive month on the back of growing economic activities. We expect continued expansion in domestic and external demand, supporting positive factory output growth in the coming months,” said MIDF in a report.
MIDF forecasts industrial production growth to strengthen to 4.2 per cent this year, citing a more encouraging near-term outlook as manufacturers may front-load production ahead of anticipated tariff increases by the new US government next year.
September’s industrial output numbers aligned with the S&P Global Malaysia Manufacturing Purchasing Managers’ Index figures, which indicated slower growth in the manufacturing sector during the same period.
Usamah Bhatti, an economist at S&P Global Market Intelligence, noted that business conditions in the Malaysian manufacturing sector remained subdued at the beginning of the fourth quarter.
“Despite companies recording a renewed rise in new order intakes, production volumes were scaled back significantly than in September. Consequently, purchasing activity was reduced, and companies kept staffing levels largely unchanged, while business confidence also softened,” he said in a report.
Though the factory output growth in September eased, RHB Research economist Chin Yee Sian believes that this will not have an impact on the overall economy. She maintains the full-year gross domestic product forecast at 5 per cent. “Our positive outlook for the manufacturing sector remains intact, driven by improved economic conditions domestically and externally, a global technology upcycle, strong export growth, and robust semiconductor sales,” she added.
