The country's manufacturing sales rose 17.3 percent in February from a year earlier to RM25.8 billion but dropped 3.4 percent from the previous month , official data showed today.

For the first two months of 2003, manufacturing sales totalled RM52.6 billion, an increase of 14.8 percent from a year earlier, the Statistics Department said.

"We are still seeing positive growth in manufacturing sales because manufacturers are paring down their inventories instead of increasing production," said Azrul Azwar, an economist with MIDF Sisma Securities.

"But if the decline in the industrial production index persists, we can expect manufacturing sales to move in tandem with it," he said.

Twin blows

Malaysia's industries are reeling from the twin blows of the war in Iraq and the outbreak of the deadly Severe Acute Respiratory Syndrome ( Sars ) which has killed more than 150 people worldwide, he said.

"Sars could turn out to be a strong disruptive force for economic activities, including in the manufacturing sector."

Azrul predicted that manufacturing was likely to grow o­nly 3.7 percent this year, compared with his forecast of 7.8 percent earlier this year.

The Malaysian Institute of Economic Research (MIER) has cut its 2003 economic growth forecast for Malaysia following the outbreak of Sars to 3.7 percent from an earlier projection of 5.7 percent.

Consumer prices up

Meanwhile, the Statistics Department said the consumer prices rose 1.4 percent in the first quarter from the same period last year.

Most prices were higher in the three months to March except for clothing and footware which fell by 2.3 percent and furniture which was down by 0.5 percent, it said.

Transport and communication prices rose 3.7 percent, medical care and health expenses were up 2.2 percent and miscellaneous goods and services rose 1.8 percent.

The index rose 0.7 percent in March compared to a year earlier but fell 0.2 percent from February. AFP