PETALING JAYA: The reopening of the economy post Covid-19 movement controls has seen businesses continue to push ahead, with industrial production posting a near double-digit gain in November last year.
The country’s industrial production index (IPI) grew 9.4% year-on-year (y-o-y) in November 2021, primarily due to strong gains by the manufacturing sector, followed by the electricity and mining indices.
In a statement yesterday, the chief statistician of the Statistics Department Datuk Seri Mohd Uzir Mahidin said the IPI’s expansion in November was attributed to an increase of 11.3% in the manufacturing index, 5.1% in the electricity index and 3.7% in the mining index.
According to a poll by Reuters, November’s IPI was expected to expand 7%.
“On month-on-month (m-o-m) basis, the IPI increased by 0.9%, driven by the manufacturing index and mining index,” he said.
Malaysia University of Science and Technology professor Dr Geoffrey Williams noted that the country has been seeing a steady increase in the IPI on a m-o-m basis since August.
However, he said the increase in November of just 0.9% was slower than the previous three months.
Chief statistician of the Statistics Department Datuk Seri Mohd Uzir Mahidin said the IPI’s expansion in November was attributed to an increase of 11.3% in the manufacturing index, 5.1% in the electricity index and 3.7% in the mining index.
“On an annual basis, the 9.4% increase is good news. But we must remember that it is against a low base in 2020, which was pretty terrible for businesses across the board,” he told StarBiz.
Centre for Market Education chief executive officer Carmelo Ferlito said Malaysia’s IPI had undergone important fluctuations, adding that the latest data needs to be read as a positive signal in the direction of stabilisation.
“In a nutshell, the production structure of the country is trying to re-adapt to meet the recovery momentum experienced worldwide; in particular, the West.”
In terms of projections for December 2021, Williams said the IPI figures for the month will also be in positive territory.
“It is likely that the December figures will also be positive because there is some momentum behind the industrial restart and a pick-up in export markets.
“However, December 2020 was not the worst month for the IPI that year, as businesses were expecting to open up, only to be frustrated by further lockdowns.
“Because there was an uptick in December 2020, we might see positive growth in December 2021, but perhaps lower on an annual basis compared with November’s data.”
For December 2021, Ferlito thinks there will be further consolidation in the country’s IPI.
“For 2022, the main factors to be weighed will be the government’s reaction to the Omicron variant and business expectations on inflation and monetary policies.
“What is important is how the government will react to an eventual new surge in Covid cases.
“Will the government resist the temptation of implementing further harmful lockdowns?”
Williams said implementing further restrictions or even lockdowns can be damaging to the economy.
“So far, it looks like the Omicron variant might be less of a problem than the Delta variant. So we hope the Health Ministry won’t overreact.
Malaysia University of Science and Technology professor Dr Geoffrey Williams
“The IPI can be a volatile indicator because industrial production is affected by many factors, including variations in demand along the supply chain, as well as fluctuations in overseas demand.”
According to the Statistics Department data, the manufacturing sector output’s rise of 11.3% in November 2021 was an improvement after recording a growth of 8% in October 2021.
“The main sub-sectors that contributed to the growth in the manufacturing sector in November 2021 were electrical and electronics (E&E) products (17.8%), food, beverages and tobacco products (12.9%) and petroleum, chemical, rubber and plastic products (8.5%).
Simultaneously, the growth of the manufacturing sector was driven by both the export-oriented industry (12.5%) and domestic-oriented industry (8.8%).
The manufacturing sector on a m-o-m basis also increased 0.1% as compared to October 2021, where the increment was reflected by higher capacity utilisation compared to last month, especially in the petroleum, chemical, rubber and plastic products, transport equipment and other manufactures and E&E product sub-sectors.
The pick-up in production activity and also global demand saw Malaysia’s manufacturing sales grow by 18.8% y-o-y to RM142.4bil in November 2021. Sales value increased by 1.2% as against the previous month.
From January to November 2021, the sales value of the manufacturing sector increased by 15.4% y-o-y to RM1.41bil.
The number of employees and salaries and wages recorded a growth of 2.6% (2.25 million persons) and 2.8% (RM81.7bil), respectively.
Sales value per employee for the first eleven months of 2021 also grew 12.5% to record RM626,036.
Separately, the mining sector output grew 3.7% in November 2021 as compared to the same period of the previous year. On a m-o-m basis, the mining index rose by 6.8% as compared to the previous month.
The growth was contributed by the increment of 10.2% in the natural gas index, while the crude oil and condensate index contracted by 4.4%.
The electricity sector output, meanwhile, rose 5.1% in November 2021 as compared to the same month last year. On a m-o-m comparison, the electricity index declined by 5%.
“The IPI in the period of January to November 2021 recorded an expansion of 7.5% as compared to the same period of the previous year.
“The increment was impelled by the rise in all components; manufacturing index (9.6%), electricity index (2.1%) and mining index (1.9%),” said the Statistics Department.