Malaysia's industrial production (IP) expanded a stronger-than-expected 6% year-on-year in October 2025, accelerating from 5.7% in September and outperforming market expectations of a modest slowdown, according to fresh data released by the Department of Statistics Malaysia (DOSM).
Consensus had forecast a 5.3% increase, while OCBC expected a softer 5.0%. On a seasonally adjusted month-on-month basis, IP rose 0.6% in October, rebounding from a 0.9% contraction in the previous month.
Manufacturing Leads the Upswing
The manufacturing sector remained the key growth engine, with output rising 6.5% year-on-year compared with 5.0% in September. Stronger performance in the electrical and electronics (E&E) segment — which surged 13.4% from 9.1% previously — helped lift overall manufacturing activity. Production of food, beverages and tobacco also expanded robustly, climbing 10.6% from 8.7% in the prior month.
These gains offset a marked slowdown in the mining and electricity segments. Mining output grew 5.8% year-on-year, easing from 10.2% in September, while electricity production moderated to 1.2% from 2.8%.
Export-Oriented Industries Gain Momentum
Export-oriented output accelerated sharply to 7.2% year-on-year from 4.8% in September, driven largely by the rebound in E&E manufacturing. In contrast, domestic-oriented industries saw growth ease to 4.9% from 5.3%.
Full-Year Outlook Remains Resilient
OCBC Senior ASEAN Economist Lavanya Venkateswaran noted that IP growth averaged 3.4% in the first 10 months of 2025. The bank expects resilient momentum through year-end, bringing full-year growth to around 3.6%, slightly below the 3.7% recorded in 2024.
However, OCBC projects a moderation in 2026, with IP growth likely easing to 3.0% amid softening global demand and normalising domestic activity. This aligns with the bank's forecast for Malaysia's GDP growth to slow to 3.8% in 2026 from an estimated 4.6% in 2025.
