Malaysia May factory output down 5.1pc

by **hlk** Mon 11 Jul 2011, 13:13

Malaysia’s industrial production fell a second straight month in May as export growth eased, supporting the central bank’s decision to refrain from raising interest rates last week.

Production at factories, utilities and mines fell 5.1 per cent from a year earlier after declining a revised 1.7 per cent in April, the Putrajaya-based statistics department said in a statement today. That compares with the median estimate for a 2.7 per cent drop in a Bloomberg News survey of 15 economists.

Europe’s debt crisis and slowing U.S. growth have damped the outlook for exports, putting pressure on Asian policy makers to delay further monetary tightening even as inflation accelerates. Malaysia’s central bank unexpectedly refrained from raising interest rates on July 7, choosing instead to order lenders to set aside more cash as it pledged to consider further policy moves after assessing economic conditions.

“This will pose significant drag on growth in the second quarter,” Irvin Seah, a Singapore-based economist at DBS Group Holdings Ltd, said before the report. “Resilient regional demand and a grinding consumption growth should lift industrial output growth in the second half of the year. That said, uncertainties to growth outlook remain.”

Malaysia’s export expansion slowed in May as electronics manufacturers shipped fewer goods to the U.S., with overseas shipments climbing 5.4 per cent from a year earlier after gaining 11.1 percent in April.

U.S. employers added 18,000 workers in June, the fewest in nine months, and the unemployment rate rose to 9.2 per cent, the highest level this year, the Labor Department said July 8.

Malaysia’s gross domestic product increased 4.6 percent in the three months through March from a year earlier, after expanding 4.8 percent in the previous quarter.

Manufacturing output by companies such as semiconductor- assembler Unisem (M) Bhd gained 0.6 per cent in May from a year earlier, today’s report showed. Mining dropped 20.1 per cent, while electricity production declined 1.6 per cent. -- Bloomberg