Malaysia’s Industrial Production Index (IPI) expanded 4.7% year-on-year in July 2026, supported by continued strength in manufacturing and electricity output, although mining activity contracted during the month, according to the Department of Statistics Malaysia (DOSM).
The July expansion moderated from the 6.5% growth recorded in June, while on a month-on-month basis, industrial production declined 2.0%, reversing the 5.5% increase in the preceding month.
Manufacturing remained the principal contributor, with output rising 6.4% year-on-year, while electricity production increased 5.0%. Mining, however, contracted 3.2%.
The latest reading nevertheless keeps Malaysia’s industrial sector on a solid growth trajectory, with the IPI expanding 5.7% during the first seven months of 2026, more than double the 2.3% growth recorded in the corresponding period last year.
Export-oriented manufacturing industries continued to drive factory activity, expanding 6.7% year-on-year in July, following 7.6% growth in June.
The expansion was led by the manufacture of computer, electronics and optical products, which maintained double-digit growth of 14.0%, while machinery and equipment manufacturing rose 14.6%.
The sustained strength in electronics-related production underscores the continued importance of Malaysia’s electrical and electronics sector to manufacturing growth, particularly amid investment and demand associated with semiconductors, data centres and AI-related infrastructure.
However, export-oriented manufacturing fell 3.1% month-on-month, reversing a strong 10.7% increase in June.
Domestic-oriented manufacturing also remained resilient, increasing 5.8% year-on-year, although this was slightly slower than June’s 6.4% growth.
Basic metals manufacturing increased 10.1%, while food processing products grew 7.2%. On a month-on-month basis, domestic-oriented industries edged up 0.4%, compared with a 1.2% increase in June.
Mining was the main drag on industrial production during July, with output falling 3.2% year-on-year, reversing the 3.1% expansion recorded in June.
The decline was primarily attributed to a sharp contraction in crude oil and condensate production, which fell 13.1%, considerably deeper than the 3.3% decline recorded a month earlier.
Natural gas production remained positive but slowed to 3.6% growth from 7.4% in June.
On a month-on-month basis, the mining index fell 4.1%, following a 0.3% contraction in June.
Electricity generation, meanwhile, increased 5.0% year-on-year, moderating from 6.7% in June. On a monthly basis, electricity output rose 3.8%, rebounding from a 2.9% decline previously.
Despite the moderation in July’s headline growth, industrial activity during the first seven months of the year remained substantially stronger than in 2025.
From January through July 2026, the IPI increased 5.7% year-on-year, compared with growth of just 2.3% during the same period last year.
Manufacturing led the year-to-date performance with 6.5% growth, followed by electricity at 6.1%, while mining increased 2.0%.
The figures indicate that manufacturing — particularly export-oriented and technology-related industries — continues to provide the main support for Malaysia’s industrial expansion in 2026, offsetting weaker conditions in the mining sector.
