Malaysia’s Industrial Performance Moderate But Improving: HLIB
Malaysia’s industrial production index (IPI) growth accelerated to 5.7% year-on-year (YoY) in September, up from 4.8% in August and above the median market forecast of 5.4%, driven by stronger performance in the manufacturing and electricity sectors.
The improvement was led by a rebound in manufacturing output, which rose 5.0% YoY (August: +2.8%), and electricity production, which climbed 2.8% YoY (August: +1.2%). Meanwhile, the mining sector maintained double-digit growth at +10.2% YoY, though moderating from +16.8% in August.
On a month-on-month (MoM) seasonally adjusted basis, the IPI contracted by 0.9% (August: –0.3%), as mining (–2.4%) and electricity (–1.6%) activity softened, while manufacturing output recorded a smaller decline of –0.3% compared to –2.4% previously.
Manufacturing Sector Gains Momentum
Growth in the manufacturing sector accelerated as both export-oriented and domestic-oriented industries expanded in tandem.
Export-oriented industries rose 4.7% YoY (August: +3.0%), supported mainly by electrical and electronic (E&E) products, which surged 9.1% YoY (August: +6.6%), in line with a strong rebound in E&E exports (+19.5% YoY).
Other export-related segments also showed improvement — wood, furniture, paper products & printing grew 3.9% YoY (August: +3.4%), while textiles and apparel rebounded modestly to +1.5% YoY (August: –1.0%). However, petroleum, chemical, rubber & plastic products remained in contraction, albeit at a slower pace (–0.6% YoY, August: –1.1%).
The domestic-oriented industries also strengthened, rising 5.6% YoY (August: +2.2%), lifted by food, beverages & tobacco (+8.7% YoY; August: +3.4%) and a rebound in transport equipment & other manufactures (+4.6% YoY; August: –1.7%) amid higher motor vehicle production (+4.5% YoY; August: –5.1%).
In contrast, non-metallic mineral, basic metal & fabricated metal output moderated slightly to +3.0% YoY (August: +3.6%).
Mining Growth Eases but Remains Robust
The mining sector continued to deliver strong gains, expanding 10.2% YoY in September (August: +16.8%), supported by low base effects and solid crude petroleum production, which grew 13.0% YoY (August: +11.4%). However, natural gas output eased sharply to +8.5% YoY (August: +20.6%).
On a MoM basis, both crude petroleum (–4.1%) and natural gas (–2.2%) output contracted after prior month gains.
HLIB: Industrial Momentum Remains Resilient Despite Global Caution
HLIB noted that Malaysia’s industrial performance, though moderate compared to its regional peers such as Singapore (+16.1% YoY), South Korea (+11.6% YoY), and Vietnam (+12.7% YoY), has shown sustained improvement since bottoming at +0.3% YoY in May.
“The recovery is being supported by a resilient manufacturing base and a rebound in mining output,” HLIB said, adding that global manufacturing conditions have stabilised, with the global manufacturing PMI edging up to 50.8 in October (September: 50.7).
Still, HLIB cautioned that manufacturers remain wary, as the future output index fell by 1.3 points amid persistent risks — including higher U.S. tariffs, geopolitical tensions, and slowing growth in major economies.
Nevertheless, the bank expects Malaysia’s diversified economic structure to cushion the economy against external headwinds. HLIB maintained its GDP growth forecast at 4.5% for 2025 and 4.1% for 2026.
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