Malaysia February industrial production likely to touch 7.8 pct on-year following upbeat export performance, says DBS Bank

Strong export performance has raised hope for Malaysia’s February industrial production figures. A healthy expansion of 7.8 percent y/y, as compared to 3.5 percent in the previous month, is likely. This is more than double the previous month’s pace and is underscored by the stunning export sales.

Exports surged by 26.5 percent y/y in February. This is the strongest in seven years. Granted that it is partly due to base effects but the surge in commodity exports is definitely a key reason as well. Exports of crude petroleum (+50.3 percent), refined petroleum products (+50.9 percent) and palm oil (+63.5 percent) all posted rapid expansion.

Beside higher prices, the increased production from the Malikai oilfield has also contributed to the numbers. Beyond commodities, electronics exports are also expected to provide some impetus to industrial output. Global electronics cycle is definitely on an upswing.

Semiconductor shipments are running at 10 percent y/y while semiconductor equipment billings are surging ahead at about 40 percent pace in recent months. All these point to a promising showing in the overall manufacturing sector and possibly a better-than-expected GDP growth.