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| Malaysia July output growth seen at slower pace |
| 09/Sep/2010 Intellasia | Business Times |
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| 9 Sep, 2010 - 10:27:10 AM |
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Industriall production in Malaysia is expected to grow at a slower pace in July in tandem with the pace of exports, said economists.
A Business Times poll expects the index that tracks manufacturing, electricity and mining sectors, to post a growth of 5.4 per cent year on year.
The Statistics Department will release the data today.
The market is bracing for a sharp moderation, said DBS Bank economist Irvin Seah.
"It will be a distinct drop from a 9.4 per cent expansion posted in the previous month as the twin effects of weaker export demand and the erosion of base effect take their toll on the headline industrial number," Seah said.
Recent July export growth moderated to 13.5 per cent year on year, down from 17.2 per cent in June.
According to Seah, export growth had peaked in March and had been trending downwards ever since.
The Purchasing Managers Index for key markets is also gradually tapering off as companies are anticipating weaker orders ahead.
Though the electronics sector has benefited greatly from the recent surge in demand for electronics components due to the introduction of new IT gadgets, that too has been showing signs of cooling off.
"While leading indicators such as the SEMI book-to-bill ratio have continued to point at expansion in the IT sector, growth in global semiconductor sales has probably peaked and we could be seeing a slower pace of expansion in the electronics sector ahead," he added.
Standard Chartered Bank expects industrial production to return to the "reality of easing growth momentum in the second half".
Economist Alvin Liew said that while the manufacturing component is likely to slow, the electricity production component is likely to fare even worse.
US investment bank Citi expects growth in manufacturing to slow in the second half, as a build up in inventories in the first half of the year may imply far more limited scope for re-stocking, especially in view of the more subdued external demand outlook.
"As of June, manufacturing output is still 6.4 per cent below its January 2008 pre-recession peak levels," Liew said.
He felt that manufacturing sales in Malaysia is likely to display similar weakness. He expects the manufacturing sales to grow by 7.5 per cent in July.
The Statistics Department will also release the manufacturing sales data today.
http://www.btimes.com.my/Current_News/BTIMES/articles/rup0091a/Article/
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