KUALA LUMPUR: Industrial production slipped unexpectedly in August to post a 2.3 per cent growth.
Although it came in a lot lower than the 7.5 per cent year-on-year polled by the Business Times, economists remarked that the manufacturing numbers, which make up the Industrial Production Index, are still healthy.
The Statistics Department said yesterday that the growth was supported by the manufacturing index and electricity index.
Dr Chua Hak Bin of Bank of America Merrill Lynch said the weaker- than-expected reading was due to contraction in mining output (-4.6 per cent) .
Growth in manufacturing output remains healthy, he said, adding that it is driven by chemical, rubber and plastic products, tech products, and transport equipment and other manufactures.
"Latest manufacturing reading is still consistent with our expectation of a pick-up in activity in the second half of 2013," he said.
Malaysia, said Chua, is starting to benefit from a pick-up in global demand, as seen in the 12.4 per cent growth in exports versus 4.5 per cent in July.
Alliance Research chief economist Manokaran Mottain said the latest IPI numbers suggested inventory drawdown during the Ramadan month, ahead of the festive holidays.
"We see continued growth in the manufacturing sector (4.6 per cent from 5.5 per cent in July), reflecting the continued rebound in the PMI (Purchasing Managers' Index) data."
He estimated the third quarter GDP to rebound to 4.8 per cent, after a disappointing growth of 4.3 per cent in the second quarter.
In the United States, the benchmark Institute for Supply Management index rose to 56.2, from 55.7 in August. In China, the official PMI marginally improved to a 17-month high of 51.1, from August's 51.0.
The sales value of the manufacturing sector in August rose by 5.1 per cent (RM2.6 billion) to record RM53.2 billion, compared with RM50.6 billion reported a year ago.