Singapore factory output growth eases to 16.3% in July as chip production cools

SINGAPORE industrial production grew 16.3 per cent year on year in July, despite a surge in the volatile biomedical manufacturing cluster.

The latest expansion - moderating sharply from the 28 per cent increase in June - came amid a high year-ago base for the linchpin electronics cluster, according to the Economic Development Board (EDB) on Thursday.

While factory output rose for the ninth straight month, it fell short of the median forecast of 19.9 per cent in a Bloomberg poll. When contributions from biomedical manufacturing were excluded, the sector expanded by a more subdued 5.8 per cent.

That's as output in the biomedical cluster jumped by 86.6 per cent in July, faster than the 44.7 per cent in June. Pharmaceuticals output more than doubled, on a different mix of active pharmaceutical ingredients and higher output of biological products.

The latest slowdown came as electronics output growth cooled to 1.5 per cent in July, from 27.4 per cent in June, which the EDB attributed to "the high production base a year ago".

Notably, production in the key semiconductor segment saw "a slight decline" of 0.4 per cent, reversing 29.5 per cent growth in the previous month.

Meanwhile, the chemicals cluster shrank by 5.6 per cent, reversing the 30.8 per cent growth clocked in June, on the back of slower petrochemicals growth that the EDB attributed "in part to turnarounds in some plants". Specialty and other chemicals also reported year-on-year decreases in production on plant maintenance shutdowns.

Still, precision engineering output was up by 20.3 per cent year on year in July, compared with the growth of 21.3 per cent in June. The machinery and systems segment continued to churn out more semiconductor equipment "to cater to the strong capital investment in the global semiconductor industry", the EDB said.

The transport engineering cluster - which had suffered from a pandemic-related downturn the year before - posted broad-based output growth of 33.1 per cent in July, extending the previous month's 27 per cent gains.

General manufacturing rose by 11 per cent in July, against growth of 16.8 per cent in June, on a recovery in demand for construction-related materials. The pick-up in miscellaneous industries offset declines in food, beverage and tobacco and printing.

On a seasonally adjusted, monthly basis, factory output decreased by 2.6 per cent in July, and dropped by 7.9 per cent when biomedical manufacturing was excluded.