Singapore factory output declines in September after 10 months of growth

SINGAPORE'S factory sector broke a 10-month winning streak in September, sinking into negative territory on deep contraction in the volatile biomedical segment.

Industrial production shrank by 3.4 per cent year on year, reversing its growth of 11 per cent in August, according to figures released by the Economic Development Board (EDB) on Tuesday (Oct 26).

The drop in manufacturing was more severe than the median decline of 0.9 per cent earlier forecast by private-sector analysts in a Bloomberg poll.

That's as biomedical manufacturing tumbled 35.9 per cent in September - worsening from the 1.7 per cent dip in the month before - as a different mix of active pharmaceutical ingredients dragged the key pharmaceuticals segment down by 46.2 per cent.

But manufacturing output grew by 9.4 per cent when biomedical manufacturing was taken out of the equation, thanks to growth in most other production clusters.

Singapore's linchpin electronics cluster increased production by 4.9 per cent in September, against 15.4 per cent in August, as semiconductor output growth cooled to 4.8 per cent, from 16.8 per cent in the month before.

Precision engineering output was up by 30.2 per cent in September, picking up from 22.1 per cent in August, as higher production of semiconductor and industrial process equipment was coupled with higher output of precision modules and components.

Meanwhile, chemicals production expanded by 12.4 per cent, compared with 0.7 per cent in August, as petroleum and petrochemicals recovered from a year-ago low base.

Transport engineering also improved from a trough in the year before, with output rising by 12.9 per cent in September, although this eased from 23.8 per cent growth in August.

"The levels of activity in the aerospace firms and shipyards had increased compared to last year where the volume of work was adversely affected by international travel restrictions and the weak global oil and gas market respectively amid the Covid-19 pandemic," the EDB noted in its statement.

On the other hand, general manufacturing output slipped by 2.7 per cent in September, against growth of 6.4 per cent in August. Despite recovering demand for construction materials, the cluster was dragged down by lower production of milk products, which the EDB attributed to "plant maintenance shutdowns and weaker export demand".

On a seasonally adjusted, monthly basis, industrial production decreased by 2.8 per cent in September, or 5.1 per cent when biomedical manufacturing was excluded.