In a noteworthy development for the Malaysian economy, the industrial production index (IPI) experienced a significant increase of 5.3% in July year-on-year, according to the latest report from the nation's Department of Statistics (DOS). This growth can be largely attributed to strong performance in the manufacturing sector, which surged by 7.7% compared to the previous year, alongside a 7.0% rise in electricity output.
Despite this positive trend, the mining sector exhibited some challenges, recording a decline of 5.0% in production for the same month. Export-oriented manufacturers in Malaysia notably outperformed expectations in July, with production increasing by 7.8% year-on-year, while industries focused on domestic markets expanded by 7.5% in the same time frame.
This robust growth in export-oriented industrial production was primarily driven by a remarkable 21.9% surge in the output of vegetable and animal oils/fats, accompanied by a 5% increase in the production of computer, electronics, and optical products, as detailed by official data. The DOS further highlighted that the year-on-year expansion in export-oriented industries reflects a parallel increase in the country’s exports of manufactured goods, which rose by 10.6% in July compared to the same month last year.
This positive export performance not only underscores the strength of Malaysia’s manufacturing capabilities but also its competitiveness in the global market. On the domestic front, the growth in industrial output was significantly supported by enhancements in the manufacture of non-metallic mineral products, which climbed by 12.2% year-on-year in July, alongside a 10.5% gain in the manufacture of basic metals.
These trends paint an optimistic picture for Malaysia's industrial landscape. Cumulatively, for the first seven months of the year, the manufacturing output in Malaysia has shown a commendable increase of 4.1% year-on-year compared to the same period in 2023, according to statements from the DOS. However, it’s worth noting that the seasonally adjusted manufacturing purchasing managers index (PMI) in Malaysia remained at 49.7 in August, unchanged from July.
This figure is notably below the neutral mark of 50, which delineates the boundary between expansion and contraction, indicating that while there are areas of growth within the manufacturing sector, challenges remain. The PMI data, reported by S&P Global in early September, suggests that the manufacturing sector is experiencing a phase that may require further attention and adjustment to sustain growth moving forward..