June 2010 Industrial Production and Updated 2Q GDP Forecast

June’s industrial production data is now out from the Department of Statistics, and show some moderation in growth (log annual and monthly changes; 2000=100):

Growth in June depending on expanded manufacturing output, much as happened in May. If we’re looking for evidence of a coming slowdown, the IPI numbers should have some weight (index numbers; 2000=100):

Note that mining has been more or less flat for some time, but electricity production, which is generally a good leading indicator, has also levelled off in the last few months. We’re still likely to see some growth in the overall economy because electricity use has been above trend growth for some time, but it’s an open question of how much.

Nevertheless, the IPI numbers underline some good numbers for 2Q GDP growth. Last month, I used the April and May data to forecast 2Q GDP – June’s IPI data lowers those growth expectations a bit, but not by much:

Revised GDP forecast is now RM139.16 billion, or about RM400 million less than I calculated last month, while the range forecast has also shifted downwards to RM141.9-RM136.4 billion. The growth percentages here are 9.4% y-o-y and 7.5% q-o-q seasonally adjusted and annualised . Those are fairly respectable numbers, especially the latter which suggests the economic growth actually accelerated in 2Q.

We’ll see next week, when the 2Q GDP numbers are actually due.

Technical Notes:

June 2010 IPI report from the Department of Statistics