Malaysia’s industrial production index (IPI) rose sharply by 3.0% year-on-year (YoY) in June, accelerating from a modest 0.3% growth in May and exceeding market expectations of a 0.5% increase, according to the Department of Statistics Malaysia (DOSM).
The stronger performance was driven by a larger gain in manufacturing output (+3.6% YoY; May: +2.8%) and a rebound in electricity production (+4.1% YoY; May: -0.1%), while mining output stabilised after steep declines in the previous month.
On a month-on-month (MoM) seasonally adjusted basis, overall industrial production rebounded by 2.8% (May: -1.4%), supported by a sharp recovery in mining (+17.6%; May: -14.3%) and continued expansion in electricity (+2.1%; May: +3.1%), though manufacturing slipped marginally by 0.4% (May: +1.0%).
Manufacturing Strengthens Across Domestic and Export Sectors
Manufacturing growth was broad-based, with domestic-oriented industries expanding by 5.8% YoY (May: +3.8%) and export-oriented industries rising 2.6% YoY (May: +2.2%).
Domestic growth was led by a rebound in transport equipment and other manufactures (+3.2% YoY; May: -5.4%), especially motor vehicle production (+3.4% YoY; May: -10.1%). Food, beverages and tobacco output remained robust (+9.8% YoY; May: +11.1%), while non-metallic mineral products, basic and fabricated metals posted a modest rise (+3.3% YoY; May: +3.5%).
Export-oriented manufacturing was boosted by stronger electrical and electronics (E&E) production (+6.4% YoY; May: +5.6%), while growth in wood, furniture, paper and printing eased (+2.4% YoY; May: +3.9%). The contraction in petroleum, chemical, rubber and plastics narrowed to -1.5% YoY (May: -2.2%), but textiles, apparel, leather and footwear declined more steeply (-2.1% YoY; May: -0.4%).
Mining production was flat in June (May: -10.2%) as a recovery in natural gas output (+2.3% YoY; May: -16.6%) offset a deeper fall in crude petroleum (-3.2% YoY; May: -1.6%). On a MoM basis, natural gas surged 29.2% (May: -18.3%), while crude petroleum edged up 0.4% (May: -5.3%).
Outlook Clouds Over Global Demand
Hong Leong Investment Bank (HLIB) said the broad-based June expansion underscored the resilience of Malaysia’s economy, supported by steady domestic and external demand. The mining sector, particularly LNG production, showed signs of recovery, although plant maintenance disruptions continue to weigh on supply.
However, risks remain as the global manufacturing PMI slipped back into contraction in July (49.7; June: 50.4), reflecting weaker output and new orders amid uncertainty over US tariff policies. New export orders fell at a faster pace (48.2; June: 49.2).
On August 1, US President Donald Trump announced a 19% tariff on Malaysian exports and warned of a potential 100% tariff on semiconductors, though further details are pending.
HLIB maintained its full-year GDP growth forecast at 4.0%, aligning with the lower end of Bank Negara Malaysia’s latest projection range of 4.0%–4.8%.
