- POSTED: 25 Apr 2014 13:11
- UPDATED: 25 Apr 2014 23:47
Singapore's manufacturing output grew a stronger-than-expected 12.1 per cent in March from a year ago, helped by a surge in the production of oil rigs, pharmaceuticals and petrochemicals.
SINGAPORE: Singapore's manufacturing output jumped by a better-than-expected 12.1 per cent in March, compared to a year ago.
This was almost double economists' expectations of a 6.4-per cent increase.
The headline number was boosted by a surge in the production of oil rigs, pharmaceuticals and petrochemicals.
Economists said an improving growth outlook for developed economies will continue to boost manufacturers' business volumes in the coming months.
The marine and offshore engineering segment was among the star performers in March, with a 45.1-per cent on-year increase in manufacturing output
This was likely due to the completion of several oil rig and ship building projects.
It led to a growth of 29.4 per cent year-on-year in output from the transport engineering cluster.
This helped overall industrial production to climb by more than 12 per cent year-on-year, according to data released by Singapore's Economic Development Board.
When compared to February, output rose by 6.1 per cent.
In general, manufacturing activity expanded across all clusters - on the back of a healthy recovery in global economic conditions and a low base in production for the same month a year ago, where industrial production declined 3.6 per cent year-on-year in March 2013.
The biomedical manufacturing cluster expanded 16.4 per cent compared to last year, helped by strong performance in pharmaceuticals which grew by 19.4 per cent.
Electronics output rose 8.7 per cent year-on-year, while chemicals output grew 5.2 per cent.
Biomedical manufacturing grew by 16.4 per cent.
Singapore's industrial production has been rising steadily since the middle of last year.
However, non-oil domestic exports (NODX) have remained weak.
Economists said the divergence is likely due to more output being exported as re-exports.
Leong Wai Ho, senior regional economist at Barclays, said: "An increasing amount of output in Singapore is being exported as re-exports, rather than direct exports, this could suggest that some of that production may not meet local content requirement, to be classified as NODX. I don't think there's an issue of structural competitiveness that was lost, or doubted last year."
Looking ahead, economists say they expect industrial output to continue growing, although not at the same pace as in March.
Rajiv Biswas, senior director and APAC chief economist at HIS, said: "We are expecting reasonable growth in manufacturing output, about 6 per cent year-on-year on average through the year, and that's going to be helped because we're expecting continued strengthening in the US economy and recovery in the Eurozone, both of which are important export markets for Singapore so that should help in terms of overall exports of pharmaceuticals where Eurozone's a very important market, but also in terms of some of the other important segments such as electronics.”
UOB forecasts a 5-per cent expansion, versus 1.7 per cent growth in 2013, in Singapore's manufacturing activity this year.
Economists said the stronger-than-expected output data for March will likely prompt an upward revision in the first quarter GDP numbers.
Barclays projected growth of 5.4 per cent - up from the advance estimates of 5.1 per cent, which could push its full year GDP forecast up to 3.7 per cent, from an earlier estimate of 3.5 per cent.