The Business Times

Quick takes: Singapore industrial output up 0.2% in Oct on strong biomed performance

Published Wed, Nov 26, 2014 · 08:02 AM

SINGAPORE'S factory output expanded 0.2 per cent in October, coming in under the market's forecast for a 0.6 per cent increase.

The Economic Development Board (EDB) said on Wednesday afternoon that industrial production was pulled up by a double-digit increase in pharmaceuticals production (24.3 per cent), which offset contractions in the electronics (-6.1 per cent) and transport engineering clusters (-8.8 per cent).

Excluding the volatile biomedical sector - which grew 22.5 per cent in October - industrial production would have declined 4.3 per cent.

Here's what private-sector economists had to say:

UOB economists Francis Tan and Jimmy Koh described October's performance as "paltry": "Year-to-date, Singapore's IP grew 3.7 per cent year-on-year, as cyclical and structural weakness in the electronics cluster and a relatively higher base in 2H 2013 contributed to lower manufacturing output. We expect further downside risks in the electronics manufacturing cluster as external demand conditions seem to point to cyclical weakness over the next few months. Moreover, the high base effects from 2H 2013 in Singapore's industrial production would also weigh on 2014 full year growth forecast."

Barclays economist Leong Wai Ho added: "Overall, the performance in electronics remains disappointing, and although we continue to expect this sector to benefit from stronger US demand (as indicated by the ISM new orders index holding close to a 10-year high), the slow pace of recovery in exports led to downgrade of our 2014 growth forecast this week by 40 basis points, to 3.1 per cent."

Bank of America Merrill Lynch's Chua Hak Bin also highlighted manufacturing's struggles: "Restructuring and strict foreign worker policies, coupled with uneven global growth, are hurting the manufacturing sector disproportionately. Manufacturing is likely to weaken in the fourth quarter following the recovery in the third quarter (1.9 per cent year-on-year)."


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