Malaysia's industrial production index to dip 1.6%

Blame it on the LNY effect.

According to DBS, the industrial production index for Feb13 is due today and will most likely disappoint. A forecast of a 1.6% YoY drop has been factored into its forecast although downside risk remains judging from the poor export performance for the same month. 

Here's more:

Headline export growth declined more than expected in February, posting a contraction of 7.7% against the consensus forecast of -4.8%. That’s mainly because February trade numbers, particularly export growth, is susceptible to the Lunar New Year effect. It’s highly distorted by the base and seasonal effects.

Production and export activities usually slow during the festive period due to the lesser number of working days in the month plus workers going on vacation leave. And this will surely be reflected in the industrial production index as well.

But one should look beyond February to price in a more accurate picture of the outlook. As it is, the PMIs of key export markets are inching higher as global economic conditions gradually normalise. This implies a more pronounced pickup from March onwards.