MANUFACTURING | Staff Reporter, Malaysia

Malaysian industrial production index to be bleak in the near term

And guess which industry was disappointing despite festive season demand?

According to DBS, it was the electronics industry.

Here’s more from DBS:

Industrial production index for Oct11 is on tap today and a modest 1.8% YoY rise has been penciled into our forecast. This marks the second consecutive months of moderation and certainly path the way for more sluggish showing in the months to come. Essentially, while recent export performance has been better than expected, it was largely driven by commodities.

Key electronics industry has continued to slump against a disappointing festive season demand. While the most recent October US SEMI book-to-bill has improved a tad and that the decline in global semiconductor sales has eased, it remains to be seen whether this marks the bottom of the current down-cycle. In our opinion, this probably reflects a temporary restocking to make up for the shortfall in inventories due to earlier destocking.

Indeed, the concern on waning global demand is further reflected by the fact that PMIs of key export markets such as Singapore, China and Europe have all headed south. Note that China’s manufacturing PMI is indicating a contraction in the sector. This is the first time since Feb09 that the leading indicator has dipped below the crucial 50 mark. The global economy remains plagued with uncertainties. And this will continue to weigh down on Malaysia’s industrial output going forward.  

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