Singapore's January factory output grows 2.2% year-on-year, lower than expected (Amended)

SINGAPORE'S industrial production in January 2017 recorded a lower than expected growth of 2.2 per cent compared to the same month a year ago.

With the volatile biomedical manufacturing stripped out, output grew 7 per cent year-on-year, based on data released by the Singapore Economic Development Board (EDB).

Compared to December 2016, factory output dipped a seasonally-adjusted 6 per cent in January 2017. Excluding biomedical manufacturing, output was down 1.5 per cent.

The January print was led by robust growth of the precision engineering (24 per cent) and electronics (14.8 per cent) cluster, which offset declines in the general manufacturing industries (-13.8 per cent), biomedical manufacturing (-13.5 per cent) and transport engineering sector (-3.8 per cent).

Stronger export demand for semiconductor-related equipment drove the machinery and systems segment higher by 40.3 per cent.

Meanwhile, the semiconductors and computer peripherals segments grew 25.8 per cent and 3.7 per cent respectively, while the rest of the electronic segments registered output declines.

The pharmaceuticals segment declined 18.3 per cent due to a different mix of active pharmaceutical ingredients produced and lower output of biological products.

Fewer production days in January as a result of Chinese New Year led to the 10.8 per cent contraction in the food, beverages & tobacco segment.

The miscellaneous industries segment fell 14.3 per cent, largely led by lower production of construction related materials such as metal doors, windows, grilles and gratings. Weak demand in commercial printing also led to a 22.7 per cent decline in printing output.

The aerospace segment grew 27.5 per cent with higher repair and servicing jobs from the commercial airlines, but this was offset by the drag in land transport (-3.9 per cent) and marine & offshore engineering (-18.9 per cent) segments. A lower level of rig-building activity and weak demand for oilfield & gasfield equipment amid the low oil price environment contributed to the decline in marine & offshore engineering segment.

Sixteen private sector economists polled by Bloomberg had expected January 2017's factory output to shrink to a median estimate of 9.5 per cent year-on-year, from December 2016's surge of 22.1 per cent. A Reuters poll of 12 analysts had a median forecast of 8.4 per cent growth.

Amendment note: An earlier version of this article incorrectly stated that December 2016's factory output was 21.3 per cent year-on-year. It has been revised to 22.1 per cent. The article above has been revised to reflect this.