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SINGAPORE: Singapore's manufacturing output fell 21.9 per cent in July, pulled down by a sharp decline in pharmaceuticals which offset gains in electronics and engineering, the government said on Tuesday.
Analysts polled by Dow Jones Newswires had projected a 15.8 per cent decline in July compared with the same month last year.
Production in the biomedicals sector tumbled an annual 67.4 per cent, led by a 69.7 per cent drop in pharmaceuticals. Medical technology output also fell 13.0 per cent, the Economic Development Board (EDB) said in a statement.
Robert Prior-Wandesforde, HSBC senior Asian economist global markets, said: "It was certainly weaker than most people were expecting it, including ourselves.
"A 22 per cent fall on the year is the weakest number for manufacturing production in Singapore seen since the end of 2001. So it's really pointing to very soft conditions indeed."
The EDB said the decrease in pharmaceuticals production was due to a high base in July 2007, lower demand for some products, and the closure of plants in preparation for a new product mix.
The fall in pharmaceuticals offset a 5.9 per cent rise in electronics output, which was driven by an 11.6 per cent jump in the production of semiconductors used in communication products.
Production of computer peripherals also rose 13.8 per cent, but output for consumer electronics fell 31.9 per cent, the EDB said.
Chemicals output increased 5.9 per cent and transport engineering rose 5.7 per cent with an increase in oil rig building and ship repair businesses, EDB said.
The July figures are preliminary.
Overall for the seven months to July, cumulative output dipped 0.9 per cent from the year before, EDB said. On a seasonally-adjusted month-on-month basis, output shrank 1.8 per cent in July from June.
Some analysts are warning that the economic situation is likely to get worse before getting better.
The economy contracted by 6.6 per cent in the second quarter from the previous three months. And a similar decline in the third quarter would mean a technical recession.
Alvin Liew, global research economist, Standard Chartered Bank, said: "We are fairly bearish on the manufacturing for the third quarter and we believe that because of this weakness of manufacturing being perpetuated from the second quarter to the third quarter, it is likely that it will drag Singapore into a technical recession for 2008 for the second quarter and third quarter."
Singapore's open, trade-driven economy has been hurt by slowing global demand. In July, the government said Singapore's main exports tumbled for the third straight month, hurt by weak demand for electronic goods in key markets including the United States.
The government has lowered its 2008 economic growth target to four to five per cent from four to six per cent previously.
- AFP/yb/ir/vm
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