PP 7767/09/2010(025354)

Malaysia
Economic Highlights
•
MARKET DATELINE

11 May 2010

Manufacturing Sales Bounced Back Strongly In March

◆ Manufacturing sales bounced back to increase by 27.7% yoy in March, from +16.8% in February and
compared with +28.9% in January, as workers returned to work after a long holiday break. This was in line with
a pick-up in the exports of manufactured goods.

◆ In line with a pick-up in sales, manufacturers recruited more workers during the month. This was the 10th
consecutive month of recruitment and a total of 10,644 workers were employed in March, compared with a recruitment
of 2,024 workers in February, indicating that manufacturers have accelerated the pace of recruitment to meet rising
demand.

◆ Going forward, the global economic recovery is gaining momentum and prospects of a sustainable global economic
recovery have improved in recent months, in our view. A recovery in the global economy, albeit uneven, will likely
translate into higher demand for the country’s exports and manufacturing sales during the year.

Manufacturing sales bounced back to increase Table 1

by 27.7% yoy in March, from +16.8% in February Manufacturing Sales
and compared with +28.9% in January (see Table 1), Total Sales/ Salaries/
as workers returned to work after a long holiday break. sales worker worker
This was in line with a pick-up in the exports of
RMbn % yoy RM'000 % yoy RM % yoy
manufactured goods, which grew by 36.1% yoy in
March, a rebound from +18.2% in February but off a 2008 579.3 10.7 572.5 19.9 24,296.8 8.9
peak of +44.2% in January. Stripping out seasonal 2009 469.6 -19.0 497.1 -13.2 24,901.8 2.5
factors and measured on a 3-month moving average
2010 Jan 43.4 28.9 45.6 33.9 2,261.9 17.1
basis, manufacturing sales strengthened to 24.5% yoy Feb 40.1 16.8 42.1 18.6 2,271.2 16.6
in March, the third straight month of picking up and Mar 46.6 27.7 48.4 26.6 2,260.1 16.9
from +20.3% in February (see Table 2), pointing to an
2009 (Jan-Mar) 104.5 -26.0 107.8 -20.1 5,813.6 -1.6
improvement in manufacturing sales.
2010 (Jan-Mar) 130.1 24.5 136.2 26.3 6,793.2 1 6 . 9

Mom, manufacturing sales grew by 16.0% in

March, a rebound from -7.5% in February and compared with +0.4% in January, as workers returned to work after a
long holiday break. This was in tandem with a sharp jump in the exports of manufactured goods, which rose by 27.9%
mom in March, compared with -12.2% in February. In the same vein, manufacturing production grew by 16.3% mom
in March, a rebound from -9.7% in February.

In line with a pick-up in sales, manufacturers recruited more workers during the month. This was the 10th
consecutive month of recruitment and a total of 10,644 workers were employed in March, compared with a recruitment
of 2,024 workers in February, indicating that manufacturers have accelerated the pace of recruitment to meet rising
demand. As a result, total employment in the manufacturing sector bounced back to increase by 0.5% yoy in March,
the first increase in more than two years and from -1.7% in February. Meanwhile, the manufacturing sector’s productivity
(measured by sales value of manufactured products per employee) grew by 26.6% yoy in March, sharper than +18.6%

Peck Boon Soon

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

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 11 May 2010

in February. Similarly, wages per employee inched up to Table 2

16.9% yoy in March, from +16.6% in February, pointing to Manufacturing Sales
a slight improvement in income. % mom

Total Sales/ Wages/

Going forward, the global economic recovery is gaining Sales employee employee
momentum and prospects of a sustainable global
‘10 Jan 0.4 -0.3 -0.1
economic recovery have improved in recent months,
Feb -7.5 -7.7 0.4
in our view. This is premised on an improvement in Mar 16.0 14.9 -0.5
investors’ risk appetite, as financial markets have stabilised (3-month moving average)
and asset prices have reached a favourable inflection point % mom % yoy
where investors are no longer fearful of catching a falling Total sales/ wages/ Total sales/ wages/
knife but view any weakness in asset prices as investment Sales emp. emp. Sales emp. emp.
opportunities. Furthermore, the sovereign debt problem in
‘10 Jan -1.0 -1.4 1.8 Jan 9.7 14.3 8.8
Europe is likely to be manageable, as the Euroland countries Feb -0.9 -1.2 1.9 Feb 20.3 24.6 12.3
and the International Monetary Fund have agreed to provide Mar 2.7 2.0 -0.1 Mar 24.5 26.3 16.9
an emergency stabilisation loan amounting to €750bn
(US$962bn) for countries under attack by speculators and
€110bn to help Greece. Also, policymakers around the globe have gained confidence on a sustainable global economic
recovery and they have begun to exit their extremely loose policy and emergency lending programmes, albeit
at a gradual pace. Meanwhile, global manufacturing and services activities have recovered to positive growth for the
last nine consecutive months in April. Similarly, the OECD composite leading indicator’s 12-month rate of change
strengthened to 10.2% in March, the seventh consecutive month of increase and from +10.0% in February. As a whole,
a recovery in the global economy, albeit uneven, will likely translate into higher demand for the country’s exports. As
a result, we expect the country’s exports to bounce back in 2010, which will likely lift manufacturing sales during
the year.

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