The Industrial production index (IPI) of Malaysia, in August, displayed steady drop of 5.7% year-on-year which is the least in 10 months.  The data is showing growing signs of the revival of country's economy. 

In July, the IPI fell a revised 8.1%.  Senior Economist at Bank Islam Malaysia Bhd, Azrul Azwar Ahmad Tajudin said, "This is further evidence that domestic manufacturing activity is picking up."

A component of the IPI, the manufacturing index, contracted 6.6% (index) in August but the figure was viewed positively by analysts. This was the first single-digit decline recorded since November last year.  

Kenanga Research's economist Wan Suhaimie agreed with this view and added that the monthly IPI number may turn positive as early as in November this year.

Wan Suhaimie forecasts the economy to rebound in the last quarter of this year, with GDP expected to grow between 3% and 4% aided by a recovery in exports aided by an improvement in factory output.

Output from the manufacturing sector turned negative in September last year during the global financial crisis.  Against July, the August IPI dropped 1.1%.  This was largely due to a 5.8% drop in the mining sector.

The chief manufacturing sector showed a 1% increase in August against the previous month reports, while electricity consumption eased 0.8%.

The statistics department said the cumulative index for the period from January-August of this year declined by 11.2% as compared with the same last year.  The manufacturing sector recorded a 14.8% drop during the first eight months of 2009 where as the mining output fell 7.1% and electricity sector showed a 2.8% contraction.