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Quick takes: Singapore Sept factory output stronger than expected
SINGAPORE'S manufacturing output increased 6.7 per cent in September 2016 compared with a year ago, boosted by growth in the biomedical and electronics sectors, the Economic Development Board (EDB) said on Wednesday.
The 6.7 per cent growth comes in the wake of a 0.5 per cent year-on-year growth in August and a 3.4 per cent year-on-year contraction in July.
Here are some comments from economists:
Weiwen Ng, ANZ Research:
"The positive growth was foreshadowed by recent firmer manufacturing PMI print, particularly for electronics, but the extent of strength surprised.
"It remains to be seen whether Sept firm industrial production print (particularly electronics) can hold up in the absence of a sustained pick up in G3 capex once the regional tech impulse (from the recent smartphone launches) fade.
"Given the still-subdued external outlook, I see today's strong industrial production print as an aberration, rather than a precursor of firmer prints ahead."
Irvin Seah, DBS:
"... the surge in September industrial production index will certainly bring about an upward revision in the third quarter 2016 gross domestic product figures. Overall manufacturing growth for the quarter now registers an expansion of 1.3 per cent versus a projected decline of 1.1 per cent in the advance estimates. That should lift headline GDP growth to 1.1 per cent year-on-year, up from 0.6 per cent in the earlier projection. Sequentially, it will imply a less severe decline of about -2.0 per cent quarter-on-quarter saar, against the previous estimate of -4.1 per cent. In short, the economy is down but not out!"
Alvin Liew, UOB:
"Singapore's Industrial Production staged a surprisingly strong finish to the end of Q3 as it expanded 6.7 per cent year-on-year (+3.3 per cent month-on- month seasonally adjusted) in September well above Bloomberg median forecasts (of 1.0 per cent year-on-year, -1.2 per cent month-on-month). This was even better than our optimistic forecasts of a 3.7 per cent year-on-year...The added bonus was that manufacturing growth was also revised higher in August to 0.5 per cent on year (0.2 per cent on month) from 0.1 per cent on year (0.0 per cent on month).
"We maintain our 2016 industrial production growth forecast 1.0 per cent. This still implies a near 3.0 per cent year-on-year average growth for industrial production in the fourth quarter of 2016."