Malaysian Production Declines Least in 11 Months Amid Recovery

By Stephanie Phang and Michael J. Munoz

Nov. 10 (Bloomberg) -- Malaysia’s industrial production fell the least in 11 months in September as improving local and overseas demand revived orders for manufactured goods.

Production at factories, utilities and mines dropped 6 percent from a year earlier, after decreasing a revised 7 percent in August, the Putrajaya-based Statistics Department said today. That compares with the median estimate for a 3.8 percent decline in a Bloomberg News survey of 17 economists.

Malaysia raised its 2009 economic forecast last month, joining Asian neighbors including Singapore and Thailand in saying this year’s slump is easing more than expected as the world recovers from recession. Prime Minister Najib Razak said last week the outlook for growth in the third quarter has “brightened.”

“As private consumption recovers in developed economies and emerging markets, shipments from Malaysia are going to rise and thus support production,” said Rahul Bajoria, an economist at Barclays Capital in Singapore.

Exports of Malaysian Pacific Industries Bhd. semiconductors and other goods fell 24.2 percent in September, easing from a 29.7 percent slump in May, after policy makers around the world cut interest rates and poured about $2 trillion of stimulus into the global economy to revive growth.

Worldwide semiconductor sales rose 8.2 percent in September from August, according to the San Jose, California-based Semiconductor Industry Association.

Najib said Oct. 23 that Malaysia’s $195 billion economy may shrink 3 percent this year, less than an earlier forecast for a contraction of 4 percent to 5 percent. The government expects gross domestic product to expand as much as 3 percent in 2010.

Malaysia’s manufacturing output fell 7.9 percent in September, after a 7.7 percent decline the previous month that was the smallest drop since October 2008.

Mining slid 3 percent, while electricity production gained 1.8 percent, climbing for a fourth month. Overall industrial production contracted 10.8 percent in the first nine months of the year.

To contact the reporter on this story: Stephanie Phang in Singapore at sphang@bloomberg.net