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Quick takes: Singapore industrial production declines 1.2% in September

Friday, October 24, 2014 - 14:25

Singapore's factory output fell into contraction mode in September for the first time since May, declining more than the market had forecast.

The Singapore Economic Development Board said on Friday afternoon that industrial production declined 1.2 per cent year-on-year, pulled down by a drop in pharmaceuticals output.

Excluding the volatile biomedical sector - which contracted 10.3 per cent last month - output would have increased by 0.5 per cent.

Economists polled by Bloomberg before the data release had been expecting industrial production to fall by a smaller 0.4 per cent.

Here's what private-sector economists had to say:

ANZ economists Daniel Wilson and Glenn Maguire think official Q3 growth estimates could be revised downwards, on the back of disappointing trade and manufacturing data:

"Industrial production slid in September, in line with weaker than expected non-oil domestic exports (NODX) released earlier this week. Both the biomedical and electronics sectors weighed on production. Moderate imports over September also suggest production growth may continue to be tepid. In view of the dismal NODX and industrial production data, the risks are tilted towards a downward revision to the Q3 advanced estimate of 2.4 per cent year-on-year for GDP (gross domestic product)."

Barclays economists Leong Wai Ho and Rahul Bajoria, however, remain hopeful for an electronics sector recovery:

"While the sustainability of electronics production may be in question given changes in the sector in the past few years, we continue to expect this sector to benefit from stronger US demand, as indicated by the rise in the ISM new orders index in August to a 10-year high (it receded marginally in September). This is now driving activity indicators in the key production centres of north Asia (particularly Taiwan), which should eventually trickle down to smaller swing producers in the region like Singapore."

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