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Singapore manufacturing output flat in June, with electronics sector faltering

Manufacturing output in the Republic grew 0.4 per cent on-year in June, propped up by the chemicals and precision engineering sectors, according to EDB figures.

SINGAPORE: Manufacturing output in the Republic was generally flat in the June, propped up by a spike in the chemicals sector, the Economic Development Board (EDB) said on Friday (July 25).

On a year-on-year basis, manufacturing output grew 0.4 per cent in June. Excluding biomedical manufacturing, output increased 0.1 per cent, the EDB said. On a seasonally adjusted month-on-month basis, manufacturing output contracted 0.1 per cent, but declined 0.2 per cent when biomedical manufacturing was excluded.

The chemicals cluster’s output rose 10.5 per cent on a year-on-year basis in June 2014. The petrochemicals segment recorded the highest gain, with output expanding 23.2 per cent - partly attributed to the low base in June last year when some plants were shut down for maintenance. The specialties and other chemicals segments expanded 9.6 per cent and 5.3 per cent, respectively, on account of higher regional demand. 

Output of the chemicals cluster in the first six months of the year increased 8.5 per cent, compared to the same period in 2013, according to the EDB.

Other segments that grew in June included the precision engineering cluster, which saw 4.8 per cent higher output on-year, biomedical manufacturing (1.6 per cent), and general manufacturing industries (0.8 per cent).

However, these gains were offset by a 4.8 per cent fall on-year in the output of the electronics cluster and a 0.4 per cent dip in the transport engineering cluster, primarily led by a dip in the aerospace segment.

Leong Wai Ho, Director of Research at Barclays Bank said the electronics sector’s fortunes mask the broader recovery in sectors that are more tied to the US investment cycle.

“And that cycle is actually improving, but it's not lifting Singapore's fortunes,” he said. “It is lifting some of the indicators in North Asia where most of the larger production hubs in Asia lie. And I think it takes some time before that vibrancy trickles down to smaller production hubs like Singapore, and the region."

Overall, for the first half of this year, Singapore's industrial production grew 5.5 per cent, compared to a year ago. However, moving into the second half, economists say they are expecting a more moderate pace of growth.

“We shouldn't pin high hopes on the pace of the global recovery in the near term,” said Irvin Seah, a senior economist at DBS. "Recovery in the US is still very sluggish, and we can't expect very much from Eurozone as well.

“I think things will still look a bit tepid in the third quarter. But hopefully towards the fourth quarter of the year, we can expect some improvement from the manufacturing sector on account of the pre-festive season demand."

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