Wednesday, August 10, 2011

Industrial production up 3.5% m-o-m in June

KUALA LUMPUR: The industrial production index (IPI) rose 3.5% month-on-month in June and edged up 1% year-on-year, due mainly to increases in the manufacturing and electricity indices.

The Department of Statistics said on Wednesday, Aug 10 that the index for the second quarter of 2011 decreased 1.6% year-on-year.

Meanwhile, the IPI in May 2011 was revised negative 5.6% year-on-year.

Commenting on the latest IPI reading, CIMB Research in a note Aug 10 said the better-than-expected industrial production (IP) growth reading in Jun allayed fears over a sharp pullback in economic expansion momentum in 2Q11.

It said the IP growth rebounded by a modest 1.0% year-on-year (-5.6% in May) after contracting for two consecutive months, due largely to a sustained recovery in the manufacturing sector.

It was marginally higher than our estimate of a 0.5% expansion but significantly outperformed consensus (-2.0%).

'Our overall assessment of economic performance indicates that real GDP will expand by 4.2% yoy in 2Q11, a deceleration from 4.6% year-on-year in 1Q11.

'We expect the industrial output to grow at an uneven pace in 2H11 given the increasing downside risks to global growth. As such, we cut this year's IP growth estimate from 3%-4% to 1%-1.5% (7.2% in 2010).

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