Malaysia's industrial production expanded strongly in May and exceeded economists' expectations, leaving the central bank at liberty to maintain the policy rate in the near term, even when the country's trade prospects have been damped by the lingering debt crisis in Europe.
Production in the industrial sector rose at a notably faster annual rate of 7.6 percent than April's 3.2 percent, the Department of Statistics said Wednesday. Economists had forecast 4.6 percent growth.
The acceleration was driven by a 6.5 percent gain in the manufacturing sector and 11.5 percent expansion in mining. Electricity output logged an increase of 6.6 percent.
"Risk on the industrial production figure is on the downside given the recent deterioration in the global growth outlook," economists at DBS Bank said ahead of the release of the data.
"Expect a return to a more sluggish production profile in the coming months when the low base effect fades off."
Compared to April, the seasonally adjusted industrial production advanced 3 percent, with manufacturing and electricity output rising 1.7 percent and 2.8 percent, respectively.
Separately, the statistical office said manufacturing sales climbed 10 percent annually in May, after rising 5.3 percent in April. On a seasonally adjusted month-on-month basis, manufacturing sales rose 0.2 percent.
The Asian country's exports rebounded in May with a 6.7 percent year-on-year increase, following two successive monthly declines. Shipments of electrical and electronics products advanced helped mainly by higher demand from the U.S., Thailand and Vietnam, while exports to European countries declined.
Bank Negara Malaysia last week retained its overnight policy rate at 3 percent for a sixth consecutive rate-setting meeting, citing weakness in global economy. The bank said domestic demand is expected to continue to be the anchor of growth in the economy, while headline inflation would remain moderate for the remainder of the year.
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June 05, 2026 16:18 ET A busy week for economic news flow saw a slew of reports being released that reflected the trends in the U.S. labor market. In Europe, economic growth and inflation data gained attention as the European Central Bank and Bank of England head for policy session later in the month. In Asia, the monetary policy session of the Indian central bank was in focus as the country, a major oil importer, reels under the pressures of a weaker rupee and rising inflation.