Economic Highlights - Leading Index Slowed Down In May, Pointing To A More Moderate Economic Growth In 2H 2010 - 19/7/2010

The Leading Index, which provides an early signal of the direction that the economy is heading, fell by a smaller magnitude of 0.1% mom in May, compared with -2.6% in April. This was the fifth decline in six months, pointing to a weakness in the leading index. The smaller decline was on account of a pick-up in money supply (+0.7%), the Bursa Malaysia Industrial index (+0.3%), CPI for services (+0.1%; inverted) and the number of housing permits approved (+0.3%) as well as smaller declines in trade with eight major trading partners (-0.2%) and the number of new companies registered (-0.6%). The improvement in the ratio of price to unit labour cost in the manufacturing sector during the month also helped. These were, however, offset partially by a sharper drop in industrial material price index (-1.2%). As a result, the leading index’s six-month smoothed growth rate slowed down further to 3.1% in May, from +4.2% in April and a recent high of +11.2% in March (see Chart 1). This was the second consecutive month of easing and the slowest increase in 14 months, signalling that the economy will likely grow at a more moderate pace in 2H 2010.

Economic Highlights - Leading Index Slowed Down In May, Pointing To A More Moderate Economic Growth In 2H 2...