Economic Highlights - Leading Index Eased Further In July, Indicating Economic Slowdown In 2H 2010 Will Likely Extend Into 1H 2011 - 22/09/2010

◆ The Leading Index, which provides an early signal of the direction that the economy is heading, fell by 0.2% mom in July, the same rate of decline as in June and compared with -0.1% in May. This was the fourth straight month of decline, suggesting that the leading index is weakening. Declines in trade with eight major trading partners (-0.2%), money supply (-0.1%), CPI for services (-0.1%; inverted) and the number of new companies registered (-0.1%) as well as a slowdown in the Bursa Malaysia Industrial index (+0.1%) were mitigated by a pick-up in the
number of housing permits approved (+0.3%) and smaller declines in industrial material price index (-0.1%) as well as unit labour cost in the manufacturing sector (-0.1%). As a result, the leading index’s six-month smoothed growth rate grew at a more moderate pace of 0.6% in July, compared with +1.7% in June and a high of
+11.2% in March (see Chart 1). This was the fourth consecutive month of slowing down and the slowest pace of increase in 16 months, indicating that the economy is likely to slow down in 2H 2010, after expanding by a strong +9.5% yoy in the 1H.

Economic Highlights - Leading Index Eased Further In July, Indicating Economic Slowdown In 2H 2010 Will Li...