- POSTED: 26 Sep 2013 13:41
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Singapore's manufacturing output in August rose 3.5 per cent from a year earlier, missing expectations due mainly to a weaker pharmaceuticals sector.
SINGAPORE: Singapore's manufacturing output in August rose 3.5 per cent from a year earlier, missing expectations due mainly to a weaker pharmaceuticals sector.
Economists polled had earlier projected August's factory output to climb 4.9 per cent on-year. Excluding biomedical manufacturing, industrial production grew 4.8 per cent on-year, according to data from the Economic Development Board (EDB).
Compared to July, industrial production contracted 1.4 per cent in August. Excluding biomedical manufacturing, output fell 1.4 per cent.
Singapore's higher factory output in August was led by the electronics cluster, which saw its output grow 5.3 per cent in August, compared to the same period a year ago. Growth was supported by the other electronics modules and components segment, which expanded 38.5 per cent. The semiconductors segment also recorded a strong growth of 12.7 per cent.
The transport engineering cluster posted an increase of 18.1 per cent on-year in August. Higher contributions from rig building and ship conversion projects continued to support the growth of the marine & offshore engineering segment, which expanded 21.0 per cent.
The land (14.2 per cent) and aerospace (12.7 per cent) segments also registered strong growth.
Output from the chemicals cluster increased 4.9 per cent in August. The petrochemicals segment rose 10.0 per cent on the back of new production capacities, while the specialties segment grew 3.6 per cent due to higher regional demand.
Meanwhile, the biomedical manufacturing cluster saw its output contract 1.9 per cent on-year in August. The medical technology segment grew 6.4 per cent, but this was offset by the 3.4 per cent drop in pharmaceuticals production, due to a lower production of active pharmaceutical ingredients.
Output from the precision engineering cluster contracted 6.4 per cent on-year in August, while the general manufacturing cluster's output declined 2.5 per cent.
Song Seng Wun, a regional economist at CIMB Research, said: "We are still seeing modest recovery in Asia - China appears to be stabilising. In Europe, they are starting to crawl out of the recession. (As for the US), I think once we pass this uncertain period of whether the government is going to shut down, (it) looks like it is on that slow recovery mode.
"So all things together, it looks like Singapore manufacturing, which is very export-dependent, is on that road to recovery."
But according to some economists, the year-on-year growth number is distorted, due to a low base of comparison, and a better indicator of manufacturing health is to look at sequential growth.
On a month-on-month basis, industrial production contracted 1.4 per cent.
Michael Wan, an analyst for Asia Ex-Japan Economics at Credit Suisse, said: "If you look at the sequential change - which is how industrial production changed from July till August - it was negative, and it was negative for the third straight month in a row.
"In terms of implications for GDP (gross domestic product), we do think that there should be some correction and pullback in third-quarter GDP when it is released next month."
Credit Suisse estimates that Singapore's third-quarter GDP could contract by around 4 per cent quarter-on-quarter, down from the strong 15.5 per cent rise in the second quarter.
Citibank is expecting a sequential decline of up to 5 per cent for third-quarter GDP.
But even after accounting for a pullback in the third quarter, economists said Singapore's official full-year GDP target of between 2.5 and 3.5 per cent is still within reach.