Business

Wednesday November 11, 2009

Slower decline in September industrial output

By LAALITHA HUNT


Economists bullish on improving demand locally, overseas

PETALING JAYA: Malaysia’s industrial production index (IPI) in September registered a slower rate of decline due to improving demand both domestically and overseas.

The IPI in September decreased 6% compared with the same month last year, following a revised 7% year-on-year decline in August.

Month-on-month, the IPI decreased 2.4%, the Statistics Department said in a statement yesterday.

RAM Holdings Bhd chief economist Yeah Kim Leng said external demand, in particular, had been improving, hence the deceleration in the IPI’s rate of decline.

“We expect IPI numbers to turn positive by December,” he said.

Maybank Investment Bank Bhd chief economist Suhaimi Illias noted that the rate of decline of the IPI had been getting smaller since the beginning of this year.

The IPI declined 14.6% in the first quarter, 10.9% in the second and 7% in the third.

Suhaimi said the improvement in IPI numbers would be reflected in the country’s gross domestic product (GDP) for the third quarter, which will be announced by the end of next week.

“The narrowing decline (in IPI) would mean a further expansion in the economic growth,” he said.

Malaysia’s GDP contracted by 6.2% in the first quarter of this year, followed by a 3.2% decline in the second quarter.

The drop in September’s IPI was due to decreases in two indices, namely manufacturing, which fell 7.9% and mining, which slid 3%, according to the Statistics Department.

However, the index for electricity posted an increase of 1.8%.

The contraction in the manufacturing output was due to decreases in the electrical and electronics products (22.2%), wood products, furniture, paper products, printing (12%) and non-metallic mineral products, basic metal and fabricated metal products (7.2%).

The fall in the output for the mining sector was due to the decrease in the crude oil index (4.2%).

However, the natural gas index increased marginally by 0.1%.

Meanwhile, Malaysia’s manufacturing sales value in September was down 20.4% or RM10.6bil from RM51.8bil a year ago, according to the Statistics Department.

It decreased marginally by 0.2% or RM77.7mil month-on-month to RM41.2bil.

The month-on-month decline was attributed to the drop in sales value of 74 industries (63.8%) out of 116 industries covered in the survey.

The five major industries whose sales value decreased were basic iron and steel products (6.7%), wire, wire products and metal fasteners (18.7%), veneer sheets and plywood (11%), television and radio receivers, sound or video recording or reproducing apparatus, and associated goods (2.8%), and hydraulic cement (10.9%).

According to Maybank’s Suhaimi, the level of decline in manufacturing sales was reflective of the weak export numbers announced last week.

On a year-on-year basis, exports declined by 24.2%, while imports were lower by 20.2% in September.

“The level of manufacturing sales usually mirrors export numbers,” he said.

However, he added that manufacturing sales value should show positive growth by December.

Total number of employees engaged in the manufacturing sector in September was 937,931 persons, up by 1,641 or 0.2% compared with the preceding month.

However, year-on-year, the number of workers decreased by 5.4% from 991,403 persons in September 2008.

Salaries and wages paid in September increased 1.3% or RM27.1mil month-on-month to RM2.1bil but were down 3.2% or RM68.7mil compared with a year ago. Productivity or average sales value per employee for September dropped by 0.4% month-on-month to RM43,979 from RM44,139 in August and went down 15.9% year-on-year.


For the full reports from the Statistics Department click here

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