Hopes aren't high for Malaysia's July industrial production numbers

It's observed that external demand is weakening.

Malaysia’s industrial production figure for July this year may disappoint, with the headline number expected to register a modest 2.5% YoY, down from a healthy 6.9% in the previous month.

According to a research note from DBS, the market is relatively more optimistic with an expectation of 4.3% expansion.

If industrial output really undershot, it’ll be the slowest pace of expansion since last November. Plainly, the report noted, it doesn’t require rocket science to sniff out the potential downside risk.

Here’s more from DBS:

Export performance in July fell way below expectation. The headline number registered a mere 0.6% YoY while consensus was looking for a 5.3% increase.

That is, the same could happen for industrial production particularly judging from the high frequency data from the global economy.

Essentially, external demand is weakning. Apart from the PMI in US, the PMIs of all key markets have all moderated in recent months.

Global electronics cycle also appeared to have peaked. And with outlook on the Eurozone turning gloomier and recovery in the US still lacklustre, risk is on the downside on the external front. Even demand from China is cooling.

With the external headwinds, export growth is expected to remain in the single digit territory for the rest of the year.

This will have significant implication on industrial production and possibly implies a slower GDP growth momentum ahead.