KUALA LUMPUR (April 12): A sharp contraction in the mining segment led to the Industrial Production Index (IPI) missing its forecasts in February, according to CIMB Research.

“At a 5% year-on-year (y-o-y) contraction in February, mining production markedly undershot our forecasts,” CIMB Research economist Michelle Chia said in a report today.

On top of that, the slowdown in manufacturing output expansion and electricity depressed IPI growth further, she said.

The report highlighted that IPI grew a slower-than-expected 1.7% y-o-y in February, its weakest pace since June 2018. This mirrored weak export growth figures and manufacturing purchasing managers’ index (PMI) in recent months, it said.

Export-oriented industries trailed manufactured export performance, as electrical and electronic, chemicals and chemical products, as well as rubber and plastic products were weaker.

“Unless mining output and factory activity accelerate sharply in March, the segment’s contribution to real gross domestic product growth could weaken in the first quarter of 2019. Nonetheless, the downside is cushioned by a recovery in the agriculture sector, particularly palm oil production,” Chia wrote.