KUALA LUMPUR (Nikkei Markets) -- Malaysia's industrial production grew at a faster than expected pace in November from a year earlier, driven mostly by the manufacturing sector, official data released Friday showed.
The industrial production index - a measure of output from mines, power plants and factories - rose 2.5% in November from the same month last year, the Statistics Department said. That compares to the median 2.3% increase forecast in Nikkei Markets poll and sharply trails October's 4.3% on-year rise.
The index rose 0.1% from October on a seasonally adjusted basis.
Economists said November's sharp deceleration in industrial production pace in the third-largest Southeast Asian economy was in-part due to shorter working days and unplanned supply outages that weighed on the mining sector.
"A resumption in mining production could contribute to growth in 2019," said Jonathan Koh, Singapore-based economist at Standard Chartered Bank. "This year, we expect healthy labor market to support private consumption but beyond that, external outlook is pretty soft."
Malaysia's November export growth decelerated sharply to 1.6% from a year earlier as sales of electronic items plunged to two-year low amid headwinds arising from a tariff tussle between its major trading partners the U.S. and China.
Shipments of electrical and electronics goods account for more than one-third of Malaysia's total exports, although the economy largely relies on its resilient services sector to crank out more than half of its gross domestic product.
Output from the key manufacturing sector increased 3.6% from a year earlier in November, while electricity index climbed 3.2%. Mining output declined 0.7% on year in November. Manufacturing sales for November rose 7.7% on year to 71.8 billion ringgit ($17.5 billion).
On a month-over-month seasonally adjusted basis, the manufacturing index rose 1.2%, while the electricity index edged higher by 1.3% in November. Mining activity declined 2.5% from the previous month.
"Looking ahead, we view IPI performance to be in good position in the first half of 2019" due to progress in U.S.-China trade talks, steady global demand and gradual pick-up in global commodity prices and currencies, said MIDF Amanah Investment Bank.
Both Standard Chartered Bank's Koh and MIDF's economist Kamaruddin Mohd Nor expect Malaysia's economy to expand 4.5% year-on-year in the fourth quarter of 2018. For 2018, Koh projects a growth of 4.7%, while Kamaruddin is forecasting a 5% expansion.
Malaysia's economy is expected to grow 4.8% in 2018 and 4.9% in 2019, according to government forecasts. Growth has decelerated for four straight quarters, expanding 4.4% in the three months ended September.