Economic Highlights - Leading Index Bounced Back In August, Pointing To A Resilient Economic Activities Ahead - 20/10/2010

◆ The Leading Index, which provides an early signal of the direction that the economy is heading, rebounded to
increase by 0.9% mom in August, from -0.1% in July and -0.2% in June. This was the first increase in five
months, suggesting that the leading index, though weakening, remains resilient. The pick-up was underpinned by
increases in real money supply (+0.8%) and CPI for services (+0.1%; inverted) as well as a stronger growth in
the Bursa Malaysia Industrial index (+0.1%). These were, however, offset partially by sharper declines in trade with
eight major trading partners (-0.2%) and unit labour cost in the manufacturing sector (-0.2%) as well as a slowdown
in the number of housing permits approved (+0.2%). Industrial material price index, on the other hand, held stable,
while the number of new companies registered remained unchanged during the month. As a result, the leading
index’s six-month smoothed growth rate bounced back to +2.2% in August, after moderating to +0.9%
in July but off the peak of +11.2% recorded in March (see Chart 1). This was the first rebound, after four
consecutive months of slowing down, indicating that the economy is likely to sustain its growth in the months
ahead, albeit at a more moderate pace.

Economic Highlights - Leading Index Bounced Back In August, Pointing To A Resilient Economic Activities Ahe...