Manufacturing output expanded by 2.1% y/y in October
Total manufacturing output (not seasonally adjusted) expanded by 2.1% y/y in October, rebounding from a 4.1% y/y (previously 4.3% y/y) decline in September. The outturn was higher than Bloomberg consensus prediction of a 1.7% y/y expansion. Discouragingly, seasonally adjusted output shrank by 0.2% m/m in October after shrinking by 0.8% m/m in September. This marked a poor start to the fourth quarter but aligned with the Manufacturing PMI business activity index, which fell to 40.3 points in October from 43.1 the month before. However, the index recovered to 46.0 points in November, signalling a likely rebound in monthly output.
Outlook
Manufacturing output is up marginally by 0.2% YTD (January to October), reflecting some improvement from a 0.4% annual decline last year. The subdued manufacturing activity underscores manufacturers' concerns about unfavourable operating business conditions. Nevertheless, we envisage a modest pick-up in activity over the medium term as demand and infrastructure conditions gradually improve.
Selected sector analysis
Growth in manufacturing output in October reflected an increase in six out of ten manufacturing divisions. Amongst the major divisions, the petroleum, chemical products, rubber and plastic products division expanded by 7.8% y/y, reflecting an increase from a 6.5% y/y expansion in September. The motor vehicles, parts and accessories and other transport equipment division expanded by 6.0% y/y, rebounding from a sharp 19.7% y/y decline in the prior month. Within this division, motor vehicles increased strongly by 34.1% y/y, following a contraction by 16.7% y/y in September. Meanwhile, parts and accessories declined by 2.7% y/y, and other transport equipment declined by 7.1% y/y. The wood and wood products, paper, publishing and printing division expanded by 3.6% y/y, after falling by 2.5% y/y; basic iron and steel, non-ferrous metal products, metal products and machinery division expanded by 2.2% y/y, reflecting an acceleration from the 1.4% y/y expansion in the previous month. In contrast, the food and beverages division declined by 4.3% y/y, marking the fourth month of decline.
