Higher shipments of electrical and electronic (E&E) as well as refined petroleum products boosted Malaysia's exports in January, according to the Statistics Department.
According to data released by the department, exports rose 3.5% year-on-year in January to RM56.99bil while imports surged 16% to RM53.72bil on an increase in capital and intermediate goods imports.
Trade data came in above market consensus, with economists expecting a 1.6% median growth for exports and 2.6% median rise for imports. The manufacturing sector's sales value rose 7.4% while December's sales value was revised upwards to 7.5% from 6%.
The data showed that electronic integrated circuits, chemicals and chemical products primarily pure xylene, parts and accessories of motor vehicles as well as optical and scientific equipment led shipments in the manufacturing sector.
Exports of refined petroleum products jumped 35.4% with mining goods increasing 4.9% to RM13.81bil. However, agricultural goods declined 16.4% to RM5.66bil largely due to lower palm oil and crude rubber exports.
Singapore-based Citigroup Inc economist Kit Wei Zheng said in a report that the critical E&E industries were now showing sequential expansion in both industrial production and exports.
“With semiconductor sales running ahead of production, manufacturers may have to increase production at some stage to rebuild inventories,” he noted.
Kit said the surge in intermediate good imports also suggests that export-oriented manufacturers may be preparing to increase production in coming months while the surge in capital goods imports continues to indicate a rebalancing in domestic demand away from consumption towards investments.
A separate release by the Statistics Department showed that the industrial production index (IPI) increased 4.6% in January year-on-year, below the median expectations of economists for a 5.6% growth but above the revised 3.5% rise of December.
The IPI, which measures factory output, saw gains in all its sub-indices, with electricity jumping 9.8%, manufacturing gaining 4.9% and mining up 2.4%.
Meanwhile, Alliance Research chief economist Manokaran Mottain said although the better-than-expected performance of exports came in as a much-needed relief, the question remains on whether this would be a sustainable trend especially in the short-term.
“A major worry remains easing demand for commodities, including crude palm oil and rubber.
“As we have anticipated earlier, demand from EU the fourth largest exporting destination continued to remain weak (-5.7% in January),” he said.
Manokaran expects manufacturing activity and therefore the IPI to remain volatile as global purchasing managers indices slowed to 50.8 in February from 51.5 the previous month due to slower expansion in China and the EU although there was continued improvement in the United States.