Thursday, June 12, 2014

April 2014 Industrial Production: Steady As She Goes

The numbers aren't as spiffy as the out-of-this-world export growth numbers, but they’re pretty respectable (log annual and monthly changes; seasonally adjusted):


Industrial output rose by 4.0%, coming off last month’s 4.3% in log terms, with a pickup in mining helping to offset a pullback in manufacturing and electricity production.

Not really much to comment on here, except it’s a pretty solid start to the 2Q2014 data releases. The implication is that there will be some drop off in 2Q2014 GDP growth, but which still entail upside risk to the full year official forecast of 4.5%-5.5%.

My flash estimates of 2Q2014 GDP growth range from 5.4%-5.9% (±1 standard error of 1%; IPI based forecasts) to 5.6%-5.7% (±1 se of 0.5%; weighted average forecasts):


But those numbers would put 1H2014 growth at between 5.8% and 6.0%. Growth would need to drop back to Malaysia’s trend growth rate of around 5.0% just to fall back to the upper range of the official forecast (5.5%). The economy would have to actually underperform to hit the target (5.3%) implied by BNM’s annual report.

So here at least is a stronger argument for BNM to raise rates at its next meeting, due exactly a month from now.

Technical Notes

April 2014 Industrial Production Index report from the Department of Statistics

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