KUALA LUMPUR, May 10 — MIDF Research has maintained the Industrial Production Index (IPI) growth forecast at 4.3 per cent this year, with production activities expected to continue expanding, as the manufacturing sector strengthened in April 2022 with Purchasing Managers’ Index (PMI) rising to 51.6.
According to the Department of Statistics Malaysia (DOSM) today, IPI increased 5.1 per cent in March 2022 versus March 2021, driven by growth in three indices, namely manufacturing, electricity and mining.
In a note today, the research house said Malaysia’s March IPI growth was the fastest in three months, bettering market’s expectation.
Nonetheless, it is keeping “a cautious view” as the war in Ukraine and lockdowns in China could adversely affect Malaysia’s production activities, especially for the export-oriented sectors.
“Moreover, rising production costs and shortages of materials could also affect local production outlook,” it said.
On a positive note, the research house said the outlook for domestic-oriented sectors is expected to be encouraging given further economic reopening and relaxation of Covid-19 restrictions.
Meanwhile, in a separate note, MIDF Research expects the labour market to stay on a steady recovery trend, as indicated by job-vacancy rate which shot to a record high at 74.9 per cent in February 2022.
Job vacancies surged to 503,200 in February, the highest ever recorded, reflecting strong domestic economic activities fuelled by reflation in local demand and continuous expansion in external sector, it said.
However, more than half of the vacancies are low-skilled, elementary jobs, while high-skilled professional jobs declined 5.9 per cent, a 17-month low; legislators, senior officials and managers 2.9 per cent, a 13-month low.
Nevertheless, MIDF Research said Malaysia’s labour market continues to strengthen. Employment increased 2.9 per cent year-on-year (yoy) in March 2022, and labour force expanded steadily at 2.2 per cent yoy.
Unemployment remained contractionary for seven consecutive months, with Malaysia’s jobless rate at a post-pandemic low of 4.1 per cent in March.
On a quarterly basis, first quarter 2022 (Q1 2022) employment growth is at a record high of 2.9 per cent yoy; joblessness contracted the highest by 12.6 per cent yoy, due to the positive effects of lifting Covid-19 curbs and external trade sector support, it noted.
The reopening of International borders will expand operating capacity in aviation, tourism, construction and manufacturing sectors.
“As an oil-exporting economy, Malaysia is set to benefit from the soaring global commodity prices, particularly palm oil and oil and gas sectors,” it said.
However, the return of foreign workers would be “modest” given the labour rules and Covid-19 measures.
“We keep our average unemployment rate forecast at four per cent this year, higher than the pre-pandemic level of 3.4 per cent,” it added. — Bernama
