Singapore factory output misses forecasts for December with 2.7% growth

AFTER a faster-than-expected surge in November, Singapore's factory output for the last month of 2018 failed to meet economists' expectations, buttressing talk that the manufacturing sector is set to slow in the months ahead.

Industrial production grew 2.7 per cent in December from a year ago, down from 7.6 per cent in the previous month, according to data from the Singapore Economic Development Board (EDB) released on Friday. This is also lower than the 4 per cent growth expected by economists.

Excluding the volatile biomedical manufacturing sector, output actually fell 1.8 per cent year on year.

Overall, manufacturing output rose 7.2 per cent in 2018 compared to a year ago.

Out of the six manufacturing clusters, only two - biomedical manufacturing and transport engineering - saw expansion in December, while the rest declined.

Biomedical manufacturing showed the strongest growth in December, with an output increase of 29.9 per cent year on year. This came on the back of the pharmaceuticals segment, which expanded 41.2 per cent. Overall, the biomedical manufacturing cluster's output rose 8.1 per cent in 2018.

The output of the transport engineering cluster grew 23.7 per cent, thanks to the marine & offshore engineering segment which expanded 31.8 per cent due to a higher level of work done in offshore projects. The aerospace segment grew 22.3 per cent with more repair and maintenance activities from commercial airlines. The transport engineering cluster grew 14.4 per cent last year.

Precision engineering was the worst performer, shrinking in output by 8.7 per cent compared to a year ago. In particular, the precision modules & components segment slumped 21.6 per cent, with lower output of optical instruments, metal precision components and dies, moulds, tools, jigs & fixtures. Output of the precision engineering cluster increased 4.1 per cent in 2018.

Electronics, which was the main driver of growth in the past two years, saw a decline of 6.8 per cent in output. The infocomms & consumer electronics and other electronic modules & components segments grew, but they were not enough to pull up the rest of the segments which contracted. The electronics cluster expanded 8.1 per cent in 2018.

Output of general manufacturing fell 5.7 per cent, largely due to the printing segment which fell 7.2 per cent, and the food, beverages & tobacco segment which declined 9.6 per cent. In 2018, output of the general manufacturing cluster grew 0.3 per cent compared to a year ago.

Finally, the chemicals cluster posted a 1.4 per cent drop in production in December, pulled down by the other chemicals and petrochemicals segments which saw output fall 2.3 per cent and 10.6 per cent respectively. Overall, the chemicals cluster's output rose 4.8 per cent in 2018.

On a seasonally adjusted month-on-month basis, manufacturing output decreased 5.6 per cent in December. With biomedical manufacturing stripped out, output fell 6.7 per cent.