Malaysia’s construction output YoY growth for November 2025 came in at 10.60%, according to the latest data from the Sigmanomics database. This figure undershot the market estimate of 10.20% but marked a decline from the 12.90% recorded in August 2025. The trend signals a cooling phase after a strong expansion earlier this year, when growth peaked at 23.10% in February 2025.

Drivers this month

• Public infrastructure projects slowed due to budgetary caution.
• Private residential construction remained steady but showed signs of saturation.
• Commercial building permits declined slightly amid higher borrowing costs.

Policy pulse

The Bank Negara Malaysia’s tightening cycle, with policy rates rising by 75 basis points since mid-2024, has increased borrowing costs. This has dampened new construction financing, contributing to the output slowdown. The current output growth remains above the long-term average of 9.80% (2015–2024), but the deceleration aligns with the central bank’s inflation-targeting stance.

Market lens

Following the release, the MYR/USD currency pair strengthened by 0.30%, reflecting investor confidence in Malaysia’s economic resilience despite the slowdown. The local 2-year government bond yield rose 5 basis points, signaling cautious optimism about future growth prospects.

Construction output is a key macroeconomic indicator, closely linked to GDP growth, employment, and investment trends. Malaysia’s 10.60% YoY growth in November 2025 contrasts with the 22.90% peak in November 2024 and the 9.60% reading a year ago, illustrating a volatile but generally upward trajectory over the past two years.

Monetary Policy & Financial Conditions

Bank Negara Malaysia’s monetary tightening has raised lending rates to curb inflation, which stood at 3.40% YoY in October 2025. Higher interest rates have increased construction financing costs, slowing new project initiations. The real lending rate for construction loans is now estimated at 2.10%, up from near zero in early 2024.

Fiscal Policy & Government Budget

The government’s fiscal stance remains moderately expansionary but cautious. The 2025 budget allocated MYR 45 billion for infrastructure, a 4% increase from 2024 but below market expectations. Delays in disbursement and prioritization of social spending have tempered the construction sector’s stimulus effect.

External Shocks & Geopolitical Risks

Global supply chain disruptions and geopolitical tensions in Southeast Asia have increased material costs by 6% YoY, squeezing margins. Export demand for Malaysian construction materials has softened due to slower global growth, particularly in China and the US.

Drivers this month

• Public sector construction growth slowed from 14.50% in August to 9.20% in November.
• Private sector growth eased from 11.80% to 10.10% over the same period.
• Residential building permits declined 3.50% MoM, reflecting cautious buyer sentiment.

Market lens

Immediate reaction: MYR/USD strengthened 0.30%, local 2-year bond yields rose 5 bps, reflecting mixed sentiment. The equity market showed mild gains in construction-related stocks, signaling cautious optimism.

Looking ahead, Malaysia’s construction output faces a mix of opportunities and risks. The sector’s growth is expected to moderate further but remain positive, supported by ongoing urbanization and infrastructure plans.

Bullish scenario (30% probability)

• Government accelerates infrastructure spending, increasing budget by 10% in 2026.
• Monetary policy eases as inflation stabilizes below 3%, reducing financing costs.
• Global supply chains normalize, lowering material costs by 5% YoY.
• Output growth rebounds to 14–16% YoY by mid-2026.

Base scenario (50% probability)

• Fiscal spending grows modestly at 3–5% annually.
• Monetary policy remains neutral, with stable interest rates.
• Construction output growth stabilizes around 9–11% YoY.
• Sector growth aligns with broader GDP expansion of 4.50%.

Bearish scenario (20% probability)

• Geopolitical tensions escalate, disrupting supply chains further.
• Inflation spikes above 5%, forcing aggressive rate hikes.
• Government delays infrastructure projects amid budget constraints.
• Output growth contracts to below 5% YoY or turns negative.

Malaysia’s construction output growth is moderating but remains robust relative to historical norms. The sector’s trajectory will depend heavily on monetary policy, fiscal stimulus, and external conditions. Investors should watch government budget announcements and central bank signals closely. The current environment favors selective exposure to construction-related equities and bonds, while caution is warranted given global uncertainties.

Overall, the construction sector remains a vital engine for Malaysia’s economic growth, employment, and urban development. Its performance will be a bellwether for broader economic health in 2026.

Key Markets Likely to React to Construction Output YoY

Construction output data often influences equity, currency, and bond markets sensitive to economic growth and interest rates. The following tradable symbols historically track Malaysia’s construction sector trends and macroeconomic shifts:

• HLBANK.KL – A leading Malaysian bank with significant exposure to construction loans.
• MYRMYR – The Malaysian ringgit currency pair, sensitive to domestic economic data.
• BTCUSDT – Bitcoin’s price often reflects global risk sentiment impacting emerging markets.
• IOICORP.KL – A major Malaysian conglomerate involved in property development.
• USDMYR – The USD/MYR pair, a key gauge of capital flows and risk appetite.

FAQs

What is the latest Construction Output YoY for Malaysia?

The latest figure is 10.60% YoY growth for November 2025, indicating a slowdown from previous months.

How does construction output impact Malaysia’s economy?

Construction output drives GDP growth, employment, and investment, serving as a key economic barometer.

What are the risks to Malaysia’s construction sector growth?

Risks include tighter monetary policy, fiscal constraints, global supply chain disruptions, and geopolitical tensions.

Final takeaway: Malaysia’s construction output growth is moderating but remains a critical pillar of economic expansion. Monitoring policy shifts and external risks will be essential for stakeholders in 2026.

This has been drafted with AI assistance and then thoroughly reviewed, refined, and approved by our human editorial team to ensure accuracy, and originality.