PP 7767/09/2010(025354)

Malaysia
Economic Highlights
•
MARKET DATELINE

11 March 2010

Manufacturing Sales Grew At A Faster Pace In January

◆ Manufacturing sales grew at a faster pace of 28.8% yoy in January, compared with +15.9% in December
and -9.6% in November. This was in line with a surge in the exports of manufactured goods, on the back of stronger
external demand for the country’s exports.

◆ In line with an improvement in sales, manufacturers continued to recruit workers and for the last eight
consecutive months up to January. Indeed, a total of 6,286 workers were recruited in January, sharply higher than
2,538 workers employed in December.

◆ Going forward, we expect the country’s exports to bounce back in 2010, which will likely lift manufacturing sales
during the year. This is in line with a recovery in the global economy, which we believe is on track, amidst
challenges.

Manufacturing sales grew at a faster pace of Table 1

28.8% yoy in January, compared with +15.9% in Manufacturing Sales
December and -9.6% in November (see Table 1). Total Sales/ Salaries/
This was in line with a surge in the exports of sales worker worker
manufactured goods, which grew by 43.7% yoy in
RMbn % yoy RM'000 % yoy RM % yoy
January, faster than +25.2% in December, on the
back of stronger external demand for the country’s 2008 579.3 10.7 572.5 19.9 24,296.8 8.9
exports. Stripping out seasonal factors and measured 2009 469.6 -18.9 497.1 -13.2 24,901.8 2.5
on a 3-month moving average basis, manufacturing
2009 Nov 41.2 -9.6 43.8 -6.2 2,142.4 5.8
sales turned around to increase by 9.6% yoy in Dec 43.2 15.9 45.8 21.9 2,264.9 4.2
January, from -0.1% in December (see Table 2), 2010 Jan 43.3 28.8 45.6 33.7 2,258.6 16.9
pointing to an improvement in manufacturing sales.
2009 (Jan) 33.6 -29.2 34.1 -21.5 1,931.9 -2.4
2010 (Jan) 43.3 28.8 45.6 33.7 2,258.6 1 6 . 9
Mom, manufacturing sales slowed down to 0.3%
in January, from +4.9% in December. This was
dragged down by a decline in the exports of manufactured goods, which contracted by 5.0% mom in January, compared
with +7.6% in December. Manufacturing production, however, picked up to 1.9% mom in January, from +1.2% in
December, suggesting that manufacturers are building up inventory.

In line with an improvement in sales, manufacturers continued to recruit workers and for the last eight consecutive
months up to January. Indeed, a total of 6,286 workers were recruited in January, sharply higher than 2,538 workers
employed in December, in line with a pick-up in demand for manufactured goods in the country. Compared to a year
ago, total employment in the manufacturing sector fell by a smaller magnitude of 3.8% in January, compared with -4.9%
in December. Meanwhile, the manufacturing sector’s productivity (measured by sales value of manufactured products
per employee) jumped by 33.7% yoy in January, after rising by 21.9% in December. Similarly, wages per employee
increased by 16.9% in January, faster than +4.2% in December, pointing to a pick-up in income.

Peck Boon Soon

(603) 9280 2163
Please read important disclosures at the end of this report.
bspeck@rhb.com.my

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 11 March 2010

Going forward, we expect the country’s exports to bounce Table 2

back in 2010, which will likely lift manufacturing sales Manufacturing Sales
during the year. This is in line with a recovery in the % mom
global economy, which is gaining momentum, amidst
Total Sales/ Wages/
challenges such as threats of inflation and asset price inflation Sales employee employee
emanating from low interest rate environment, particularly
in Asia and emerging economies, and concerns over a ‘09 Nov -6.2 -7.9 -0.1
double-dip in the recovery of the global economy as D e c 4.9 4.6 5.7
‘10 Jan 0.3 -0.4 -0.3
government spending fizzles out and countries beginning to
(3-month moving average)
normalise monetary conditions. This is because confidence
% mom % yoy
of consumers and businesses are gradually improving and
Total sales/ wages/ Total sales/ wages/
economic activities in many countries are gathering
Sales emp. emp. Sales emp. emp.
momentum. In addition, Greece’s deficit problem appears
to be manageable, as the European Union will likely step in ‘09 Nov -0.1 -0.3 -0.5 Nov -11.9 -7.5 4.1
to help when force to a corner. Furthermore, governments Dec 1.9 1.7 2.0 Dec -0.1 4.6 5.8
around the globe are unlikely to withdraw the stimulus ‘10 Jan -1.0 -1.4 1.7 Jan 9.6 14.2 8.7
spending prematurely and the unwinding of emergency
programmes and quantitative easing by developed countries are gradual in process. Also, the tightening measures
undertaken by China, India and other countries in this region are meant to unwind the extremely loose monetary policy
implemented during the credit crisis and the process is expected to be gradual as well, in our view. As a result, we
expect a cyclical upward momentum to be built up to enable the global economy to sustain its recovery into 2010. As
it stands, global manufacturing and services activities picked up for the last six to seven consecutive months. Similarly,
the OECD composite leading indicator’s 12-month rate of change grew for the fifth straight month and at a faster pace
of 9.6% in January, compared with +8.1% in December and +6.0% in November, pointing to an improvement in OECD
economic outlook.

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