August 10, 2017 9:19 pm JST

Malaysia's June industrial production grows 4% on year, beats view

KUALA LUMPUR (Nikkei Markets) - Malaysia's industrial production rose 4% in June from a year earlier, the pace slowing from the previous month but trumped market expectations, led by gains in the manufacturing sector, official data released Thursday show.

In May, the industrial production index -- a measure of output from mines, power plants and factories -- rose 4.6% from a year earlier. The median forecast in a Nikkei Markets' poll of seven economists was for a 3.3% year-over-year increase. The index grew 4.3% year-on-year in the second quarter.

Economists said the latest factory output print, coupled with earlier data showing strong exports, suggest robust economic activity in the second quarter. The third-largest Southeast Asian economy grew 5.6% in the first three month of the year.

"Incorporating these numbers, Malaysia could record another robust quarter of economic expansion in the second quarter," said CIMB Investment Bank's economist Michelle Chia. "We revise our second quarter real GDP growth estimate to 5.7% year-on-year from 4.9% year-on-year previously."

Output at the key manufacturing sector increased 4.7% from a year earlier, while mining activity rose 2.4% in June, the Department of Statistics said. The electricity index climbed 2.1% year-over-year.

Manufacturing sales for June rose 11.5% on year to 62.3 billion ringgit. Exports rose 10% in June from a year earlier thanks to stronger shipments of electronics and robust demand from China. Imports climbed 3.7% year-on-year largely driven by intermediate and capital good.

"IPI in the second-half will be supported by healthy exports, while domestic demand will be supported by consumption and infrastructure projects," said Affin Hwang Investment Bank's economist Alan Tan. In the second quarter, GDP likely grew 5.2% year-on-year, he said.

The government forecasts the economy to expand between 4.3% and 4.8% this year, after growing 4.2% last year.

--Jason Ng

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