KUALA LUMPUR (April 12): MIDF Research has projected the construction industry to grow by 6.5% this year, lower than Construction Industry Development Board's (CIDB) forecast of 8% and the sectoral growth rate recorded in 2016.

The research house pointed out in a note today its lower forecast is tied to lower expected growth in total project value for 2017 at 2.2%, against a 30% increase recorded in 2016, though growth in other sectors can provide a bit of support.

"The rejuvenation in external trade activity so far [has] spurred higher growth output in the manufacturing industry — which we would expect to spill over to other industries by the second half of this year — reflecting a more broad-based economic improvement," the research house added.

Malaysia's Industrial Production Index continued to increase with a 4.7% year-on-year growth in February, when the manufacturing sector hit a record production rate of RM56,989 per employee on increased infrastructure and export activities.

Other factors would include the nature of construction projects that are trending, said MIDF Research. "A continuous focus on affordable housing projects in the real estate industry will slightly underpin construction projects' value due to its nature of having lower gross development value (GDV).

"Nonetheless, it will still remain as the fastest growing industry for 2017," the research house said.

On Tuesday, CIDB chief executive Datuk Ahmad Asri Abdul Hamid said the Malaysian construction industry is expected to grow by 8% in volume this year, reflecting a total value of RM170 billion.

The news was met with muted enthusiasm among the construction counters on Bursa Malaysia's Main Market — at 12pm, losers matched gainers with 30 counters each.

Gainers were led by Kerjaya Prospek Group Bhd, Muhibbah Engineering (M) Bhd, and WCE Holdings Bhd while losers were led by ML Global Bhd, Gamuda Bhd and Ekovest Bhd.

"I think generally this is the level that it should be," an analyst told theedgemarkets.com. The construction industry growth had, in fact, outperformed gross domestic product growth since 2012, said the analyst. "Hence, the announcement is positive, but not anything unexpected." — theedgemarkets.com

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