Singapore's June factory output disappoints with 0.3% year-on-year dip

SINGAPORE'S factory output disappointed with a 0.3 per cent year-on-year dip in June, preliminary figures released on Tuesday showed.

Last month's performance not only ended a three-month year-on-year growth streak and deepened a sequential monthly fall, it also took market consensus by surprise.

The headline decrease was largely due to a 10.2 per cent year-on-year contraction in biomedical output.

Excluding biomedical output, however, factory output grew by 2.4 per cent. This was supported by growth in the electronics and precision-engineering clusters - the only ones that expanded in June.

Overall factory output ushered in 2016 with a 1.2 per cent year-on-year growth in January. It then fell by 3.5 per cent in February, then grew 0.6 per cent in March, 2.8 per cent in April and 0.8 per cent in May. May's figure was revised downwards from an earlier estimate of 0.9 per cent growth.

On a month-on-month, seasonally adjusted basis, June's headline output had contracted by 2.5 per cent compared to the preceding month. May itself was a 0.4 per cent fall from April.

The headline 0.3 per cent year-on-year fall was a far cry from market consensus. An earlier poll of 16 economists by Bloomberg had pencilled in a 0.5 per cent expansion.

June's biomedical output had been dragged down by a 15.3 per cent fall in pharmaceutical output.

"The decline in pharmaceutical output was due to a different mix of active pharmaceutical ingredients being produced, as well as lower output of biological products," said the Economic Development Board of Singapore.

Biomedical output had increased on a year-to-date basis, however. It was up by 12.3 per cent compared to the same period a year ago.

Electronics cluster was the star performer in June, registering a 19.7 per cent on-year growth. This was due to a 39.1 per cent expansion in semiconductor output and an 11 per cent increase in data storage output.

Precision-engineering output improved by 4.3 per cent, driven by higher export demand in the machinery and systems segment.

Economists often view industrial production numbers as closely related to the GDP (gross domestic product) data for the manufacturing sector. Cumulatively, the first six months of this year put industrial output at a 0.3 per cent year-on-year growth.