Industrial production (IP) rose 6.8% y/y in August, largely supported by the strong output from mining (+5.3% y/y) added with manufacturing (+7.6% y/y) and electricity (+3.0% y/y). Besides, manufacturing sales continued to grow at double digit by 16.5% y/y in August, the ninth consecutive month of double-digit growth with the August PMI reading at 50.4.
Despite a better manufacturing output figure in August, we expect its output to grow moderately in 2017. The PMI numbers have not firmly surpassed the expansionary region, only twice i.e. in April and August, due to lack of strong new businesses and export orders. Potential business sentiments in manufacturing is still weak for the first three quarters of 2017. But the sector’s output will continue to benefit from the cyclical recovery coming from the export-led activities and an undervalued MYR based on a basket of currencies with domestic activities complementing