DOSM: Leading Index signifies better economic recovery ahead

KUALA LUMPUR (June 23): Malaysia's economic recovery is in a better direction as the performance of the Leading Index (LI) for April 2022 eased to a better negative of 0.5% from a negative 1.4% in March 2022, said the Department of Statistics Malaysia (DOSM).

The LI is a predictive tool used to anticipate economic upturns and downturns in an average of four to six months ahead.

In a statement, the DOSM said the decrease in the LI was influenced mainly by a drop in the number of housing units approved caused by a decline in applications from developers during the said month.

Based on a month-on-month comparison, LI slipped to a negative 0.5%, dragged by the number of housing units approved (-1.4%), the number of new companies registered (-0.5%), and the Bursa Malaysia Industrial Index (-0.3%).

“Despite the softening in the LI for the reference month, the direction portrayed by the smoothed LI remained favourable by being consistently above the long-term trend and registered better index points.

“This implies that the trend of Malaysia's economic recovery is in a better direction,” said chief statistician Datuk Seri Dr Mohd Uzir Mahidin.

He said nonetheless, the issue of inflation and rising commodity prices need to be taken into account, considering the global situation.

The DOSM said the Coincident Index (CI), which measures the overall current economic performance, is picking up since February 2022, reflecting an increase in economic activities with economic and social activities operating at full capacity.

The CI continued to climb by 5.3% year-on-year to attain 120.3 points in April 2022.

On a monthly basis, the growth in the CI increased to 2% in the reference month, compared with 1.4% in the previous month.

“The growth was driven by a significant increase in the volume index of retail trade (1.6%).

“In relation to the reference period of the Malaysian business cycle, the CI detected a recession-induced by the Covid-19 pandemic beginning in February 2020 and ending in July 2021,” it said.