Manufacturing growth slows, but long-term trends offer tech support

THE thesis behind the year-long rally in tech stocks remains solid despite slower-than-expected industrial production and forecasts for a tempering of growth in the second half of the year.

While some of the heady year-on-year growth numbers that were seen in previous quarters may not last, the development of the digital economy continues apace, and should support fundamentals for tech companies even after accounting for base effects.

Industrial production in Singapore rose 5 per cent year-on-year in May. While the positive number implied growth, it was nevertheless down from the 6.7 per cent expansion in April, and missed private-sector forecasts of about 7.5 per cent.

But the manufacturing sector is not uniform. In May, the year-on-year slowdown mainly came from biomedical manufacturing, down 22.2 per cent, and transport engineering, down 12.8 per cent. Electronics did significantly better, increasing 35.1 per cent against year-ago production levels. Precision engineering also rose 19.…