Malaysia’s industrial production activity strengthened in April 2026, with the Industrial Production Index (IPI) expanding 8.2% year-on-year (YoY), significantly above market expectations of 4.5%, according to a report by Hong Leong Investment Bank Research (HLIB).
The latest growth marked a notable improvement from the 3.1% expansion recorded in March 2026, driven by stronger performance across the manufacturing, electricity and mining sectors.
Manufacturing output increased 8.3% YoY in April, accelerating from 5.5% in the previous month, while electricity production expanded 10.5% compared with 4.8% previously.
The mining sector also rebounded strongly, recording a 6.8% increase after contracting 6.5% in March.
On a seasonally adjusted month-on-month (MoM) basis, IPI growth accelerated to 5.5% in April from 1.1% in March, supported by improvements across manufacturing, mining and electricity output.
Manufacturing sector drives growth
HLIB said the manufacturing sector gained further momentum, supported by broad-based growth across both export-oriented and domestic-oriented industries.
Export-oriented manufacturing output expanded 8.3% YoY in April, compared with 6.1% in March, led by continued strength in the electrical and electronics (E&E) segment.
The E&E subsector grew 12.8% YoY during the month, slightly higher than the 12.5% growth recorded previously, supported by sustained growth in Malaysia’s E&E exports.
Other export-oriented industries also recorded improvements, including wood, furniture, paper products and printing, which grew 5.5%, as well as textiles, wearing apparel, leather products and footwear, which expanded 3.4%.
The petroleum, chemical, rubber and plastic products segment also strengthened to 3.8% from 0.1% previously, supported by higher production of refined petroleum products and rubber and plastics products.
HLIB noted that supply disruptions linked to tensions around the Strait of Hormuz have so far remained limited.
Domestic industries recover
Domestic-oriented industries accelerated to 8.4% YoY in April from 4.1% in March, driven by stronger transport equipment and manufacturing activity.
The transport equipment and other manufacturing segment surged 10.7%, supported by a recovery in motor vehicle production, which increased 13.5% compared with a contraction of 9.8% in March.
The improvement was partly attributed to a shift in holiday timing, which resulted in more working days compared with the same period last year.
Production of non-metallic mineral products, basic metals and fabricated metal products also strengthened, expanding 6.5% during the month.
Meanwhile, food, beverages and tobacco production remained resilient, growing 8.9%, although slightly slower than March’s 9.1%.
Mining rebounds on stronger natural gas output
The mining sector returned to growth in April, expanding 6.8% YoY, mainly supported by a sharp increase in natural gas production.
Natural gas output rose 16.6%, reversing the 3.4% contraction recorded in March.
However, crude petroleum and condensate production continued to decline, falling 6.4%, although the pace of contraction improved from March’s 11.3% decline.
On a monthly basis, both crude petroleum and natural gas production recorded declines.
Outlook remains cautious amid global risks
HLIB said the latest IPI performance showed that Malaysia’s industrial activity remained resilient despite ongoing external uncertainties.
The global manufacturing Purchasing Managers’ Index (PMI) remained stable at 52.6 in May, supported by continued growth in output and new orders.
However, HLIB cautioned that escalating geopolitical tensions in the Middle East could weigh on business confidence and increase input costs.
“While April’s IPI print indicates that domestic industrial activity remained resilient against elevated external headwinds, we remain cautious on the growth outlook,” HLIB said.
The research house highlighted risks from potential energy supply disruptions linked to the ongoing US-Iran tensions.
HLIB maintained its 2026 gross domestic product (GDP) growth forecast for Malaysia at 4.5%, pending further clarity on geopolitical developments.
