KUALA LUMPUR: Malaysia's industrial production is expected to continue to be weak for the rest of year, after the Industrial Production Index (IPI) fared worse than consensus expectation in September.
The IPI declined by -0.5 per cent in September year-on-year (YoY) compared with concensus expectations of -0.1 per cent.
Hong Leong Investment Bank (HLIB Research) in its note said that growth was dragged by the downturn in mining production,down 5.2 per cent YoY, offsetting the pickup in electricity and manufacturing production which were up by 2.5 per cent and 0.4 per cent YoY respectively.
"The manufacturing index posted a rebound of +0.4 per cent YoY on the back of stronger domestic-oriented production, while export-oriented production continued to decline. "The fall in export-oriented production is also consistent with the negative exports growth (-13.7 per cent YoY) during the month," said the research firm.
Meanwhile, domestic-oriented production gained momentum (+5.5 per cent YoY) during the month underpinned by stronger production across non-metallic mineral products, basic and fabricated metal products and food, beverages & tobacco.
HLIB Research added that global manufacturing purchasing managers index slipped further into contraction territory at 48.8 in October, reflecting a further decline in new orders.
"The lack of demand led to further caution among firms, causing them to scale back on their purchasing of materials and employment. "In line with this, the current weakness in Malaysia's industrial production is also likely to persist for the rest of the year, dampened further by tight financial conditions," the firm said.
HLIB Research maintains its 2023 gross domestic product at three percent YoY.