Malaysia’s Industrial Output Rises 6.3% in September, Beating Economists’ Forecasts
Key Facts
Malaysia’s industrial production index rose 6.3% year on year in September 2026, accelerating from 5.0% in August and beating the average forecast of 12 economists of 5.6%, The Edge reported, citing official data. Performance was driven by growth in manufacturing and electricity, while a contraction in mining limited the overall increase. Manufacturing grew 9.4% year on year, compared with 7.4% in August, while electricity generation rose 10.7% from 9.0%. By contrast, mining output fell 9.4% after declining 7.4% in the previous month. The figures show a divergence between sectors supporting industrial activity and the extractive sector.
Manufacturing growth in September was broad across several major groups, led by electrical and electronic products, which rose 17.3% year on year, according to the Department of Statistics Malaysia. Food, beverages and tobacco products increased 7.2%, while non-metallic mineral products, basic metals and fabricated metal products rose 6.8%. On a monthly basis, the industrial index rose 1.3% in September, after gaining 2.6% in August. Manufacturing output recorded a monthly increase of 2.9%. The comparison shows that the index’s monthly pace of increase eased even as annual manufacturing growth accelerated.
In the mining sector, the Department of Statistics Malaysia attributed the annual decline to an 11.8% drop in crude oil and condensate output and a 7.9% fall in natural gas production. Manufacturing sales rose 12.9% year on year to 191.1 billion ringgit in September, The Edge reported. Capacity utilisation in the sector was 84.9%, while it reached 88.6% in electrical and electronic products. These indicators show sales growth and operating levels alongside expanded output in major manufacturing groups. They come in a month when mining output fell more sharply than its 7.4% decline in August.
The Edge reported that export-oriented industries, which account for two-thirds of the manufacturing sector, grew 10.7% in September, compared with 6.6% for industries oriented toward the domestic market. The newspaper attributed the strength of the export-oriented group mainly to expansion in computer, electronics and optical products, followed by vegetable and animal oils and fats. Domestic contributions included primary metals, metals and processed food, the same report said. This divergence puts manufacturing growth in the context of the sector’s reliance on external demand. It also highlights the role of electronics among the industries that recorded the strongest increases during the month.
At the quarterly level, industrial production grew 5.3% year on year in the third quarter of 2026, compared with 7.7% in the second quarter, Bernama reported, citing the Department of Statistics Malaysia. The manufacturing index rose 7.8% and the electricity index 8.3%, while the mining index contracted 6.7%. In the first nine months of the year, industrial production increased 5.7%, compared with 2.9% in the corresponding period of 2025. Taken together, the quarterly and cumulative figures point to slower growth in the third quarter, while the increase since the start of the year remained above that of the previous year. The gap between manufacturing and mining performance remains a notable feature of the production data.
RHB Research expects manufacturing to remain resilient, supported by a global electronics upcycle and capacity expansion in high-value industries. It warned that oil price volatility amid geopolitical tensions could raise upstream input costs. MBSB Research said the manufacturing Purchasing Managers’ Index returned to expansion territory in October at 51 points, from 49.9 in September, as new orders and output improved, with some contribution from AI-related demand. It noted, however, that materials and transportation costs and uncertainty around supply chains could limit momentum. BIMB Securities expects the strength of the electronics sector to support continued industrial expansion and stable index growth in 2027, while flagging risks from weakness in mining and external factors.
On monetary policy, Bank Negara Malaysia kept its overnight policy rate at 2.75% in its decision issued on 5 November 2026, according to the bank’s official record. The record did not establish that the decision was in line with market expectations. HLIB analysts said strong growth momentum and inflation risks heading into 2027 could open the way for monetary policy normalisation in the first half of that year. They also said global demand for technology would continue to support Malaysian industrial activity in the near term. This remains an analyst forecast, separate from the September data and the recorded interest-rate decision.
The Department of Statistics Malaysia set 11 December 2026 as the date for publishing the next industrial production data. The next release will provide a fresh indication of the path of manufacturing and mining after their divergent performance in September. It follows an expansionary reading in the manufacturing Purchasing Managers’ Index in October, according to MBSB Research. Forecasts cited by research houses are monitoring demand for electronics, materials and transportation costs, and supply-chain risks. Developments in mining and external factors will also remain among the factors that could affect the next reading on industrial activity.