KUALA LUMPUR (Feb 21): The manufacturing industry operated at 79.8% capacity in the fourth quarter of 2023 (4Q2023), edged down by 0.4 percentage points, from a rate of 80.2% in 4Q2022, said the Department of Statistics Malaysia (DOSM).

In a statement on Wednesday, chief statistician Datuk Seri Mohd Uzir Mahidin said a lower capacity utilisation of the manufacturing industry was primarily attributable to decreases in the sub-sector of petroleum, chemical, rubber and plastic products (-4.2 percentage points); and electrical and electronic products (-0.5 percentage points).

The manufacturing industry operated at 79.4% capacity utilisation in 3Q2023, down 1.9 percentage points year-on-year (y-o-y) while expanding every quarter.

He noted that the utilisation rate in the manufacturing industry exceeded 80% for two consecutive months, operating at 80.4% in October 2023 and 80.1% in November 2023, while the capacity utilisation rate for December 2023 dropped to 78.9%.

“The decline in the capacity utilisation rate in 4Q2023 mirrored the trend of the manufacturing industrial production Index, which slipped by 0.2% (3Q2023: -0.1%). 

“The decrease in production capacity was primarily influenced by low demand, insufficient supply of materials, and the repair & maintenance of machinery & equipment,” Mohd Uzir said.

Five sub-sectors posted a capacity utilisation rate above 80% in 4Q2023, with the highest rate of 83.2% recorded by the manufacture of non-metallic mineral products, basic metals and fabricated metal products sub-sector, with a y-o-y increase of 4.5 percentage points.

This was followed by transport equipment and other manufactures with 82.2%.

Meanwhile, the manufacture of petroleum, chemical, rubber and plastics sub-sector operated at the lowest capacity with 77.9%, reducing by 4.2 percentage points.

In comparison with the preceding quarter, all sub-sectors posted an increase except for the electrical and electronic products, which declined by 0.7 percentage points to 79.2%.

As for capacity utilisation in export-oriented industries, Mohd Uzir pointed out that it continued to decline for four consecutive quarters, dropping by 2.1 percentage points y-o-y to 8.4% in this quarter.

“The manufacture of coke and refined petroleum products recorded a substantial deterioration of 9.6 percentage points, reaching 76.1%, followed by the manufacture of textiles, which shrank by 7.7 percentage points to 76.9%,” he said.

In comparison with the previous quarter, the capacity utilisation rate in export-oriented industries increased slightly by 0.02 percentage points.

Mohd Uzir said the capacity utilisation rate of domestic-oriented industries remained vibrant, registering 82.8% in 4Q2023 (+3.3 percentage points) with all industries in this segment posting an upward trend, except for the manufacture of leather and related products, which decreased by 10.9 percentage points to 81.9%.

At the state level, Mohd Uzir said that in 4Q2023, the manufacturing industry in six states operated at a capacity exceeding the national rate, namely Labuan (95.6%), Negeri Sembilan (83.8%), Pahang (83.7%), Selangor (82.1%), Melaka (81.9%) and Johor (81.8%).

Six states experienced a y-o-y decrease in capacity utilisation, namely Kedah, Kelantan, Melaka, Perlis, Terengganu and Sarawak.

Perlis continued to record the lowest capacity utilisation rate at 72.3%, he said.

The manufacturing industry’s overall performance in 2023 operated at a lower capacity rate of 79.3%, which fell by 1.1 percentage points as against 2022’s 80.4%.

“Almost all sub-sectors posted a decline except for the non-metallic mineral products, basic metal and fabricated metal products (+1.5 percentage points at 80.7%) and transport equipment and other manufactures (+0.5 percentage points; 82.1%).

Export-oriented industries decreased by 2.1 percentage points to 78.3% in 2023 (2022: 80.4%).

Domestic-oriented industries posted 81.4%, improving by 1.1 percentage points (2022: 80.3%).