SINGAPORE: Singapore’s manufacturing output rebounded in August after contracting for three months, boosted by electronics production and improvement in all but two clusters.
The surprise performance outpaced the expectations of analysts, who have since upgraded their forecasts for the year.
Industrial production rose 13.7 per cent in August on a year-on-year basis, said the Economic Development Board (EDB) in a media release on Friday (Sep 25). Production had declined by a revised 7.6 per cent in July, 6.4 per cent in June and 8.3 per cent in May.
Excluding biomedical manufacturing, output grew 15.3 per cent, EDB said.
On a seasonally adjusted month-on-month basis, factory output increased 13.9 per cent last month. Excluding biomedical manufacturing, production grew 4.8 per cent.
Following the report, UOB upgraded its full-year industrial production outlook to +2.5 per cent from -2 per cent previously.
UOB economist Barnabas Gan said that further expansion in Singapore’s industrial production environment cannot be ruled out, noting that perceived risks arising from the COVID-19 pandemic "appear to have greatly diminished at this juncture".
OCBC upgraded its outlook for the third quarter of 2020 to +2.5 per cent from -0.5 per cent previously.
"A very stellar performance was seen in August," said Ms Selena Ling, head of treasury research and strategy at OCBC Bank.
She added that August's factory output performance, which was the strongest since March, "bodes well for the recovery story" for Singapore's overall economy in the third quarter.
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OUTPUT IN MOST CLUSTERS GREW IN AUGUST
According to EDB, industrial production for most clusters expanded in August, except for general manufacturing and transport engineering, which continue to be impacted by COVID-19.
The electronics cluster recorded the largest increase in August, with output up 44.2 per cent year-on-year.
This growth, said EDB, was “mainly attributed” to the semiconductors segment, which grew 56.9 per cent amid demand from cloud services, data centres and the 5G market.
In contrast, the infocomms and consumer electronics, and computer peripherals and data storage segments recorded declines.
The precision engineering cluster expanded 9.4 per cent last month compared to the same period a year ago.
The machinery and systems segment rose 17 per cent on the back of higher production of semiconductor equipment. However, the precision modules and components segment fell 4.3 per cent, said EDB.
As for biomedical engineering, production output grew 8.4 per cent last month compared to the same period in 2019.
The medical technology segment rose 19.3 per cent with higher export demand for medical instruments, while pharmaceutical output increased 5.7 per cent on account of higher output in biological products.
The chemicals cluster increased 3.1 per cent year-on-year in August, partly due to expansion in the specialties and petrochemicals segments.
The other chemicals segment and petroleum segment posted declines, however, on the back of plant maintenance shutdowns and lower export orders amid the COVID-19 outbreak, said EDB.
The general manufacturing cluster contracted 18.6 per cent in August on a year-on-year basis, with all segments recording declines.
The food, beverage and tobacco segment fell 13.8 per cent due in part to maintenance shutdowns, while printing output fell 21.8 per cent as COVID-19 affected orders. The miscellaneous industries segment declined 24.1 per cent on account of lower output in construction-related products.
The transport engineering cluster also contracted. Production plunged 36 per cent year-on-year in August mainly due to lower levels of activities in aerospace and marine and offshore engineering, where output fell 34 per cent and 50.7 per cent respectively.