PP 7767/09/2010(025354)

Malaysia
Economic Highlights
•
MARKET DATELINE

10 June 2010

Manufacturing Sales Slowed Down In April

◆ Manufacturing sales slowed down to 19.6% yoy in April, from +26.4% in March and compared with +16.8%
in February. This was due to weaker growth in the exports of manufactured goods, indicating that global demand
for the country’s exports is beginning to ease.

◆ Despite a slowdown in sales, manufacturers continued to employ more workers during the month. This was
the 11th consecutive month of recruitment and a total of 9,361 workers were employed in April, compared with
a recruitment of 7,223 workers in March.

◆ Going forward, the global economy will likely expand at a more moderate pace in 2H 2010, as the impact
of government stimulus spending around the globe fades and austerity measures in some European countries to
address fiscal deficit and debt problems begin to bite. At the same time, the normalisation and policies tightening
measures in some countries will likely slow down economic activities in these countries. Despite the weakness,
we do not expect the global economy to fall off the cliff and into a double dip. As a whole, we expect the
country’s exports and manufacturing sales to slow down in 2H 2010, after a strong pick-up in the 1H.

Manufacturing sales slowed down to 19.6% yoy Table 1

in April, from +26.4% in March and compared with Manufacturing Sales
+16.8% in February (see Table 1). This was due to
Total Sales/ Salaries/
weaker growth in the exports of manufactured goods,
sales worker worker
which grew at a slower pace of 23.7% yoy in April,
RMbn % yoy RM'000 % yoy RM % yoy
compared with +36.7% in March, indicating that global
demand for the country’s exports is beginning to ease. 2008 579.3 10.7 572.5 19.9 24,296.8 8.9
Stripping out seasonal factors and measured on a 3- 2009 469.6 -19.0 497.1 -13.2 24,901.8 2.5
month moving average basis, manufacturing sales
2010 Feb 40.1 16.8 42.2 18.8 2,271.2 16.6
softened to 21.0% yoy in April, from +24.0% in March
Mar 46.1 26.4 48.1 25.7 2,285.4 18.2
(see Table 2), pointing to a weakness in manufacturing
Apr 42.9 19.6 44.3 16.5 2,246.4 15.3
sales.
2009 (Jan-Apr) 140.4 -26.0 145.8 -20.1 7,762.7 -1.7
Mom, manufacturing sales fell by 6.9% in April, 2010 (Jan-Apr) 172.5 22.9 180.1 23.5 9,064.9 1 6 . 8

after a rebound to +14.8% in March. This was in

tandem with a drop in the exports of manufactured goods, which fell by 10.4% mom in April, compared with +28.5%
in March. In the same vein, manufacturing production contracted by 4.2% mom in April, after surging by 15.2% in March.

Despite a slowdown in sales, manufacturers continued to employ more workers during the month. This was the
11th consecutive month of recruitment and a total of 9,361 workers were employed in April, compared with a recruitment
of 7,223 workers in March, indicating that manufacturers have accelerated the pace of recruitment to meet rising demand.
As a result, total employment in the manufacturing sector strengthened to 2.7% yoy in April, after rising by 0.5% in
March. Meanwhile, the manufacturing sector’s productivity (measured by sales value of manufactured products per
employee) weakened to 16.5% yoy in April, from +25.7% in March. Similarly, wages per employee eased to 15.3% yoy
in April, from +18.2% in March.

Peck Boon Soon

(603) 9280 2163
Please read important disclosures at the end of this report.
bspeck@rhb.com.my

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 10 June 2010

Going forward, the global economy will likely expand Table 2

at a more moderate pace in 2H 2010, as the impact Manufacturing Sales
of government stimulus spending around the globe fades % mom
and austerity measures in some European countries to
Total Sales/ Wages/
address fiscal deficit and debt problems begin to bite. At Sales employee employee
the same time, the normalisation and policies tightening
‘10 Feb -7.4 -7.6 0.4
measures in some countries, particularly in Asia, will likely
Mar 14.8 14.0 0.6
slow down economic activities in these countries. Already,
Apr -6.9 -7.8 -1.7
global manufacturing activities from China to the US
and Euroland are beginning to show signs of weakness (3-month moving average)
% mom % yoy
in May. Similarly, global services activities weakened
for the first time in four months during the month. Although Total sales/ wages/ Total sales/ wages/

the OECD composite leading indicator’s 12-month rate of Sales emp. emp. Sales emp. emp.

change strengthened for the seventh consecutive month to ‘10 Feb -0.8 -1.2 1.9 Feb 20.4 24.7 12.3
10.2% in March, from +10.0% in February, the gain is Mar 2.3 1.7 0.3 Mar 24.0 26.0 17.3
softening. Indeed, measured on a m-o-m basis, the leading Apr -0.4 -1.0 -0.2 Apr 2 1 . 0 2 0 . 4 1 6.7

indicator has been trending lower for the last few

months, indicating that OECD countries’ economies are likely to expand at a slower pace in the months ahead. Despite
the weakness, we do not expect the global economy to fall off the cliff and into a double dip given that policy
normalisation and tightening remain gradual. We expect the sovereign debt problem in Europe to be manageable despite
the lingering concerns, following the announcement of an emergency stabilisation loan of €750bn for countries under
attack by speculators and the €110bn rescue package for Greece. Furthermore, investors’ risk appetite has improved
and asset prices have reached a favourable inflection point where investors are no longer fearful of catching a falling
knife but view any weakness in asset prices as investment opportunities. As a whole, in tandem with a more moderate
growth in the global economy, we expect the country’s exports and manufacturing sales to slow down in 2H 2010,
after picking up strongly in the 1H.

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