Singapore"s manufacturing output rises 2.7% on-year in July

SINGAPORE: Singapore’s manufacturing output beat market expectations to post a 2.7-per cent increase in July from a year ago, led mainly by higher contributions from the transport engineering and electronics clusters.

Economists polled had earlier expected July’s industrial production output to climb 1.5 per cent on-year.

This is in contrast to the re-stated 4.2-per cent decrease in June.

According to data from the Economic Development Board, total manufacturing output grew 3.6 per cent, excluding biomedical manufacturing,

Compared to June, industrial production contracted 1.9 per cent in July. Excluding biomedical manufacturing, output fell 0.1 per cent.

Singapore’s improved factory output in July was driven mainly by a 13.9-per cent on-year jump in output from the transport engineering cluster.

The marine and offshore engineering segment posted a strong gain of 19.0 per cent, while the aerospace segment grew 7.2 per cent with more repair and maintenance jobs from commercial airlines.

Meanwhile, electronics production output rose 3.5 per cent in July, compared to the same period a year ago. In particular, growth was supported by higher export demand in the other electronics modules and components segment, which saw output surge 38.1 per cent.

Output from the general manufacturing cluster also increased 5.4 per cent in July. Growth in the miscellaneous industries segment more than offset the declines in the food, beverages and tobacco and printing segments

The biomedical manufacturing cluster saw its output contract 1.3 per cent on-year in July. The medical technology segment increased 16.3 per cent in July, but pharmaceuticals production fell 4.4 per cent.

Output from the precision engineering cluster also declined 7.4 per cent on-year in July.  

Economists say the latest numbers continue to point to a slow but steady turnaround in the manufacturing sector. But they warn that there are “pockets of risks” ahead. 

DBS Bank’s senior economist, Irvin Seah, said: “A lot has to do with the low base effect in the same period last year. We are still looking at a gradual easing off in industrial production.

“Overall manufacturing as well as GDP growth in the second half of the year is likely to be sideway. In fact, I do not discount the possibility that we could possibly see a quarter-on-quarter contraction in GDP growth in the third quarter.”

Meanwhile, some economists are more optimistic about the growth outlook.

Ms Selena Ling, OCBC Bank’s head of treasury research strategy, said: “In the first seven months of this year, generally, manufacturing output contracted. I think, going forward for the remaining five months, we are expecting an improvement in terms of growth momentum.

“We are looking for industrial production to basically come in at 5.3% year-on-year growth for the next five months. This will bring us to a rather modest type of performance for the full year – about 1.3% for manufacturing output for the full year.”

Looking ahead, some economists say the recovery in the US and the positive effects arising from ‘Abenomics’ in Japan could bode well for the manufacturing sector. But, the slowing growth in China, Indonesia and Malaysia could also affect consumer demand.

Emerging economies like India, Indonesia and Malaysia are all key export markets for Singapore. A slowdown in these markets will hurt Singapore, say economists. 

Singapore"s manufacturing output rises 2.7% on-year in July