Malaysia IPI rises 3% in February on better manufacturing output

PETALING JAYA: Malaysia's industrial production index (IPI) increased 3% year on year (yoy) in February 2018, supported by the positive growth in the manufacturing and electricity segments, according to the Department of Statistics.
Manufacturing sector output grew 4.7% in February 2018 after registering 6.9% growth in January. The main sub-sectors which recorded increases in February 2018 were: petroleum, chemicals, rubber and plastics products (7.0%); electrical and electronic equipment products (5.4%); and non-metallic mineral products, basic metal and fabricated metal products (5.0%).
Electricity output expanded 2.8% yoy in February 2018, but the mining sector output decreased 1.6% due to a 3.5% drop in the natural gas index (-3.5%). Meanwhile, the crude oil index rose 0.5%.
IPI growth in January 2018 was revised to 5.4% from 3% yoy.
Despite only registering 4.2% growth yoy in the first two months of 2018, MIDF Research remains optimistic on the IPI's performance this year.
"As guided by the recent Business Tendency Index data, we believe the IPI growth will be growing between 3.5% and 4.5% during the first half of 2018."
For the second half of the year, it is expected to rebound as trade war concerns ease, market uncertainty lessens post-general election and commodity prices rise gradually.
The research house said the IPI will also be driven by robust external trade and a gradual increase in commodity prices, which will boost industrial activity in Malaysia.
"Hence, based on solid uptrend in trade activities and further steady domestic consumption, we expect industrial production growth to hit 4.3% in 2018."
Nevertheless, it cautioned that headwinds from global trade tensions could pose possible threat to the estimate.
On another note, Malaysia recorded a 4.9% rise in manufacturing sales to RM62.3 billion in February compared with RM59.4 billion recorded in the same month last year.
The significant increase in sales value was due to the expansion in electrical and electronic products (5.7%); petroleum, chemical, rubber and plastic products (6.6%) ; non-metallic mineral products, basic metal and fabricated metal products (5.1%).
The three sub-sectors contributed 80.4% to the sales value of the manufacturing sector.
A total of 1.07 million employees were engaged in the sector in February this year, an increase of 2.2% or 22,900 people from 1.04 million in February 2017.
Salaries and wages paid rose 16.7% or RM537.6 million to a total of RM3.76 billion, thus registering an average salaries and wages per employee of RM3,527 in February 2018.
Sales value per employee gained 2.6% to RM58,494 in February 2018 compared with the same month last year.