Marked improvement in industrial production

By Rupa DamodaranPublished: 2009/12/11

MALAYSIA'S industrial output in October marked the first growth in 14 months, thanks to increased production in the manufacturing and electricity sectors.

October industrial production index (IPI) rose 0.7 per cent from a year ago, beating market expectations and a Business Times poll which had expected a 1.96 per cent contraction.

The Statistics Department said the growth was due to the rises in two of its indices - manufacturing (1 per cent) and electricity (13.4 per cent).

Manufacturing output increased in the non-metallic mineral products, basic metal and fabricated metal products (6.3 per cent); petroleum, chemical, rubber and plastic products (4.8 per cent); and food, beverages and tobacco (3.7 per cent).



The mining sector however recorded a drop in output due to the decreases in crude oil index (2.4 per cent) and natural gas index (3.5 per cent).

The pick-up in the IPI followed October's export performance which also showed the first positive growth of 1.6 per cent year-on-year in months.

Month-on-month, the IPI rose 5.7 per cent.

"It does come as surprise to us as we envisaged advance economies stabilising alongside other economies in the region, despite the pick-up being modest," said Inter-Pacific Research head Anthony Dass.

"The strength in production doesn't just reflect higher exports, but also an ongoing improvement in both private consumption and capital spending," said HSBC Bank senior Asian economist Robert Prior-Wandesforde.