INDUSTRIAL output increased 6.5 per cent in August on the back of stronger manufacturing activities.
The Statistics Department said the Industrial Production Index (IPI) rose on positive growth in three sub-indices, namely manufacturing (7.4 per cent), mining (3.6 per cent) and electricity (8.4 per cent).
In the case of manufacturing, the Statistics Department attributed growth to transport equipment and other manufactures (18.6 per cent), food products, beverages and tobacco (13 per cent) and electrical and electronics products (11.8 per cent).
The IPI in July was revised to 0.6 per cent year-on-year.
Dr Chua Hak Bin of Bank of America Merrill Lynch said the data surprised on the upside.
Year-on-year readings were probably distorted by the timing of the Hari Raya festivities in July and August.
Chua, however, noted that after a remarkable run in the first half, recent data continue to point towards a slowdown in growth momentum.
The average growth for the IPI, for instance, averaged 3.6 per cent year-on-year in July-August, weaker than the 5.8 per cent recorded over the second quarter on slower manufacturing output and a mining contraction.
“Weaker trade activity is impacting manufacturing and externally-oriented services sectors.”
The slowdown in export growth, he said, is more pronounced, expanding 1.3 per cent so far in the third quarter versus 14.4 per cent in the second quarter.
The research house expects Bank Negara Malaysia to maintain the Overnight Policy Rate at 3.25 per cent next month due to the slower growth momentum in the second half.
Meanwhile, the Statistics Department said the manufacturing sector recorded a five per cent increase in sales in August totalling RM55.8 billion.
