IPI growth slows to 4% in April, slower 2Q GDP expected

KUALA LUMPUR: Malaysia’s Industrial Production Index (IPI), which tracks overall industrial activity, grew at a slower pace of 4% year-on-year (y-o-y) in April 2015, compared with a revised 7.1% y-o-y in March.

According to the Department of Statistics, the slower growth was driven by an increase in outputs in the manufacturing, mining and electricity sectors. The manufacturing, mining and electricity indices recorded production growth of 4.1%, 3.9% and 3% respectively, according to the latest statistics.

The IPI figure was below market consensus of 4.5%.

In seasonally adjusted terms, the IPI in April 2015 recorded a marginal decrease of 0.4% month-on-month, following declines of 1% in manufacturing, 1.9% in mining and 1% in electricity. Under the manufacturing sector, output growth of 4.1% y-o-y was recorded in April, driven by increases in petroleum, chemical, rubber and plastic products (3.6%), electrical and electronics products (4%) and food, beverages and tobacco (5.5%). The mining sector registered growth of 3.9%, thanks to the increase of the crude oil index of 15%.

The slower April IPI pace comes after the implementation of the 6% goods and services tax (GST) which took effect on April 1, hurting consumer spending and demand.

For the first four months of the year, overall IPI rebounded by 5.8% against 4.7% growth a year ago.

AllianceDBS Research chief economist Manokaran Mottain said going forward, it remains cautious, especially in light of the headwinds of low crude oil prices and uncertainties in global demand for manufactured exports. “While softer commodity prices contributed to declines in most exports, the implementation of the GST may have hit the production side, given the uncertainties in the cost of production, especially for manufactured goods,” he said in a note yesterday.

Given the April data, AllianceDBS expects gross domestic product growth in the second quarter of 2015 to be weaker at between 5.3% and 5.5% compared with 5.6% in the first quarter. “For the full year, we maintain our forecast at 5% [compared with 6% in 2014],” said Manokaran.

Source : http://www.theedgemarkets.com/my/article/ipi-growth-slows-4-april-slower-2q-gdp-expected



My comments: Folks this is a very bad number ...almost 50% down m-o-m ...due to GST I believe ...slowing growth as rakyat are not spending as much ...possibly leading to lower sales lower profits etc ...