Monday, March 12, 2012

January 2012 Industrial Production: Some Congrats Are In Order

Not for the numbers, they aren’t that encouraging…in fact they look downright bad. But rather DOS is slowly but surely rolling out seasonally adjusted  numbers that account for the peculiarities of the Malaysian calendar. It started last year with the trade numbers, and this month we’ve got a seasonally adjusted IPI. Thumbs up guys.

If I have a complaint, the English notes on DOS’ seasonal adjustment procedure read like they came out of Google Translator. It’s not laugh out loud funny as some of the Ministry of Defense’s, but still…

For the moment I’m keeping to my own seasonally adjusted series, as the span of official seasonally adjusted data available isn’t all that long – just 2009 onwards – and the differences are still pretty minor. But I’ll be switching over to the “official” numbers for both IPI and trade statistics, time permitting.

But to get back to the meat of this post, January industrial output was essentially flat compared to last year’s, and below December’s (log annual and monthly changes; seasonally adjusted):



The monthly growth numbers look especially terrible.

I think the seasonal adjustment I’m doing isn’t fully compensating for CNY, but then it seems neither does DOS’ official seasonally adjusted numbers (which show an even bigger drop in output).

There’s perhaps a stronger behavioural impact than seasonal adjustment programs might account for. I’m not talking here about a holiday effect, but the act of bringing forward production and shipments due to the confluence of year-end holidays and sales, followed closely by another major holiday. We might see an even stronger version of this effect at the end of this year, when CNY will more or less coincide with the December holidays.

Be that as it may, the numbers are anything but good. It mirrors the drop in trade numbers, which was a regional phenomenon in January, but doesn’t follow the regional trend of countervailing stronger industrial production, such as occurred in Korea for example.

More to the point, January IPI numbers put a serious dent on the 1Q2012 GDP prospects, though it isn’t a complete disaster:


Based on this forecast, 1Q2012 GDP should hit between RM149-RM144 billion, with a point forecast of RM147.1 billion. That gives growth of 4.4% over last year, and about 4.5% at an annualised quarterly rate.

Technical Notes:

January 2012 Industrial Production Report from the Department of Statistics (full report here: warning pdf link)

1 comment:

  1. I was surprised as well with the SEAM when I saw it at noon. In fact, it's the paper you mailed to me earlier!

    But when I looked at it, I decided to give it a pass. I'd expect the adjusted figures to be positive instead of a big negative.