Malaysia Output Growth Slows to 11-Month Low on Manufacturing

By Shamim Adam

Sept. 11 (Bloomberg) -- Malaysia's industrial production grew at the slowest pace in 11 months in July as demand for manufactured goods waned and electricity output eased.

Production at factories, utilities and mines rose 1.8 percent from a year earlier after a revised 2.2 percent gain in June, the Putrajaya, Malaysia-based Statistics Department said today. That was below the median estimate of 16 economists surveyed by Bloomberg News for a 2.1 percent gain. Output rose 4.2 percent in the first seven months.

Orders for electronics produced by Intel Corp. and other manufacturers in Asia may weaken further as a U.S. slowdown spreads to economies including Europe and Japan. Commodities sales, which have been holding up Malaysian exports this year, may also ease as palm oil and crude prices fall from records.

``The downtrend will continue because of softening demand for electronics, which is dependent on overseas sales,'' said Joanna Tan, an economist at Forecast Singapore Pte. ``There are strong headwinds and we may see a recovery in global demand only in the third quarter of next year.''

The Southeast Asian economy expanded at the slowest pace in a year last quarter as manufacturing eased. Economic growth in 2008 may slow to a three-year low of 5.7 percent as exports ease and higher food and fuel prices leave consumers with less to spend domestically, the Ministry of Finance said in its annual economic report last month.

Manufacturing grew 5.6 percent in the three months ended June, compared to a revised gain of 7 percent in the previous period, the central bank said on Aug. 29. The industry accounts for more than 30 percent of Malaysia's economy, and almost four- fifths of the country's exports.

Manufacturing

Production by companies including Unisem (M) Bhd. and Malaysian Pacific Industries Bhd., Malaysia's two largest publicly-traded semiconductor assemblers, grew 1.5 percent in July from a year earlier, slower than the previous month's revised 2.8 percent gain.

Mining output increased 3.1 in July, compared with a contraction of 0.8 percent in June. The industry grew 1.9 percent in the first seven months.

Electricity production gained 1.3 percent in July after expanding 3.5 percent the month before. It expanded 3.5 percent in the January-to-July period.

To contact the reporter on this story: Shamim Adam in Singapore at sadam2@bloomberg.net