Singapore's July industrial output surprises with 3.6% decline year on year

REVERSING four consecutive months of year-on-year expansion, manufacturing output in Singapore declined 3.6 per cent in July, due to broad-based contractions in all clusters except electronics.

The latest data, released by the Economic Development Board (EDB) on Friday, disappointed market expectations for a 0.9 per cent increase in industrial production (according to a Reuters poll).

In seasonally adjusted month-on-month terms, manufacturing output declined 4 per cent in July - the third straight month of contraction. This was also a worse showing than private-sector economists had forecast; they had foreseen a drop of just 1.1 per cent.

Excluding the volatile biomedical manufacturing sector - whose output shrank 9.7 per cent year on year in July - overall industrial production would still have contracted, albeit by a smaller 2 per cent.

The worst-performing cluster was transport engineering, which posted a 21.8 per cent decline in output.

EDB explained: "This was largely attributed to the marine & offshore engineering segment (which contracted 33.4 per cent), in which rig-building activities and demand for oilfield & gasfield equipment remained weak amidst the low oil price environment.

"The aerospace and land transport segments declined 2.3 per cent and 2.6 per cent respectively."

Production in other clusters such as precision engineering, general manufacturing and chemicals also dropped by 4.9 per cent, 10.2 per cent and 3.2 per cent respectively.

The only cluster to post an expansion in output was electronics, whose production increased 16.2 per cent in July thanks to a 34 per cent jump in semiconductors.

Still, this was not enough to offset the broad-based declines seen in all other clusters in July.