PETALING JAYA: As the output of export-and domestic-oriented industries in Malaysia shrunk in February on a month-on-month (m-o-m) basis, this calls into question the outlook of the manufacturing sector in the coming months.
The Statistics Department, which released the Industrial Production Index (IPI) for February yesterday, reported that domestic-oriented industries contracted by 7.5% compared to the preceding month.
In January 2024, the output of the domestic-oriented industries grew by 4.9% m-o-m.
Meanwhile, export-oriented industries slipped by 5.7% m-o-m in February, as opposed to a slight growth of 0.2% in January 2024.
Mohd Afzanizam Abdul Rashid, the chief economist of Bank Muamalat (M) Bhd, said the fall of both export-and domestic-oriented industries into negative territory in February could be due to “seasonal effect”.
This was considering the Chinese New Year celebration during the month of February.
“But beyond that, the global demand condition is still uncertain as reflected by the Malaysia’s Purchasing Managers Index which is still hovering below the 50-point mark.
“This would mean manufacturers are still pessimistic in general and therefore, they would remain guarded in respect to their production activities,” he told StarBiz.
Judging from the trend of total employed persons, Mohd Afzanizam said it seems that manufacturers are mindful of adding more staff to produce greater output.
“This can be seen in the number of employed individuals in the manufacturing sector which fell to 2.365 million persons in February 2024 from a peak of 2.378 million persons during October 2023,” he said.
The Statistics Department announced yesterday that the IPI grew modestly by 3.1% year-on-year (y-o-y) in February, induced by positive momentum in all sectors.
Earlier in January, the country’s industrial production saw a stronger growth of 4.3% y-o-y.
The IPI statistics consist of three sectors, namely mining, manufacturing and electricity.
Chief Statistician Datuk Seri Mohd Uzir Mahidin said in a statement that the moderate growth of 3.1% in February was primarily attributed to the slower output growth in the manufacturing sector, which grew by 1.2% as compared to 3.7% in January 2024.
“Nevertheless, the mining and electricity sectors accelerated further by 8.1% and 10.9% respectively.
“In comparison with the preceding month, the IPI declined by 6.3% m-o-m, in contrast to the positive 2% m-o-m recorded in the previous month,” he said.
Explaining further, Mohd Uzir said that the rise of 1.2% in the manufacturing output in February 2024 was supported by domestic-oriented industries, which expanded by 3.8% y-o-y as compared to 8% y-o-y in January 2024.
The expansion in domestic-oriented industries was primarily driven by the manufacture of fabricated metal products, except machinery and equipment, which registered an increase of 8.4%; followed by the manufacture of other non-metallic mineral products (5.1%); and the manufacture of motor vehicles, trailers and semi-trailers, at 2.9%.
In the meantime, the export-oriented industries returned to negative territory with a mild contraction of 0.1% y-o-y in February 2024 as against the positive growth of 1.6% recorded in the previous month.
The contraction was mainly due to the decrease in the manufacture of vegetable, animal oils and fats (minus 13.5%); the manufacture of chemicals and chemical products (minus 2.8%); and the manufacture of electrical equipment (minus 2.2%).
“This was consistent with the country’s export performance, which registered a downturn of negative 0.8% in February 2024 after experiencing positive growth in the preceding month,” said Mohd Uzir.
The chief statistician further noted that Malaysia was not the only country that saw a slowdown in IPI performance.
According to him, the IPI of Vietnam, Japan, Thailand, Taiwan and the United States showed a declining trend in February 2024.
Commenting on Malaysia’s IPI performance for the first two months of 2024, Mohd Uzir said the index expanded by 3.7% y-o-y.
