Malaysian industrial production index likely to have rebounded in August

Malaysian industrial production data for the month of August is scheduled to release tomorrow. According to a DBS Bank research report, the industrial production index is likely to have rebounded slightly to 1.8 percent year-on-year, as compared with prior month’s rise of 1.2 percent. While front-loading of orders ahead of a new round of tariffs might prompt possible upside surprise, the overall performance is still considered sub-par compared to the average 3 percent growth year to date.

PMIs in the key markets have come in mixed. Industrial output and export performance in Singapore has been disappointing. Trade war between the U.S. and China is still ongoing. While there has been some degree of trade diversion favouring Malaysia, the positive impacts are limited to some specific clusters.

“In addition, latest August export contracted by 0.8 percent YoY, which further underscores the headwinds on the manufacturing sector. A more broadbased improvement in global outlook would be required to lift production output in a sustained manner. And that appears unlikely given the gloomy global economic landscape”, added DBS.