Singapore manufacturing output up 0.1% in August after July slump
Manufacturing output in Singapore rose 0.1 per cent in August from a year ago, recovering from its first contraction in five months in July.
Excluding biomedical manufacturing, manufacturing output grew 2.3 per cent year-on-year, according to figures released by the Economic Development Board (EDB) on Monday (Sep 26).
On a three-month moving average basis, manufacturing output declined 0.9 per cent in August, compared to a year ago. On a seasonally-adjusted and month-on-month basis, it was unchanged from July to August overall, but grew 1.5 per cent excluding biomedical manufacturing.
MANUFACTURING OUTPUT BY SECTOR
The greatest growth in output was from the precision engineering cluster, which had 11.6 per cent higher output last month on a year-on-year basis. This was buoyed by 17.1 per cent growth in the machinery and systems segment, on the back of higher output in semiconductor-related equipment, as well as mechanical engineering work. The precision modules and components segment also grew 3.3 per cent, which EDB said was due to higher output in electronic connectors and dies, moulds, jigs, tools and fixtures.
The next highest increase was from the electronics cluster, which saw output climbing 10.8 per cent compared to the same month last year. The semiconductors and other electronic modules and components segments grew 19.7 per cent and 3.1 per cent respectively, but this was partially offset by declines in the other electronic segments.
The chemicals cluster’s output increased slightly by 1.8 per cent year-on-year. EDB said the growth was supported by higher output in the other chemicals (15.4 per cent), petroleum (12.3 per cent) and specialties (11.3 per cent) segments.
The other chemicals segment registered higher output in fragrances while higher output in mineral oil additives contributed to the growth in the specialties segment. However, the petrochemicals segment declined 17.1 per cent as output was affected by plant maintenance shutdowns, EDB said.
The transport engineering cluster’s output shrank 16.8 per cent year-on-year in August, the largest contraction among the clusters. The marine and offshore engineering segment declined 31.4 per cent, which offset the gains made in the land transport (11.4 per cent) and aerospace (4.8 per cent) segments. This decline was due to rig building activities and demand for oilfield and gasfield equipment remaining weak amid the low oil price environment, according to EDB.
Meanwhile, the biomedical manufacturing cluster continued on its downward trend, registering a fall of 8.4 per cent compared to the same month last year. The medical technology segment grew 12.1 per cent, which was on the back of higher export demand for medical devices, but this was offset by a fall in the pharmaceuticals segment due to lower production of active pharmaceutical ingredients and biological products, EDB said.
The output of the general manufacturing cluster recorded a more gentle decline of 1.6 per cent on a year-on-year basis, with the food and beverages and tobacco segment growing 8.1 per cent while the miscellaneous industries and printing segments shrank 5.4 per cent and 20.3 per cent respectively. EDB attributed the lower output of the printing segment to weak demand for commercial printing and said the miscellaneous industries segment reported lower output of fibreglass products, wooden furniture and fixtures and construction-related materials.
For the first eight months of the year, only the electronics and biomedical manufacturing clusters performed better than the same period last year, growing 8.7 per cent and 6.8 per cent respectively. In contrast, the precision engineering, chemicals, transport engineering and general manufacturing clusters fell 1.6 per cent, 2.4 per cent, 18 per cent and 1.9 per cent respectively.
STRONG ELECTRONICS NUMBERS UNLIKELY TO LAST: ANALYSTS
One economist said the recent strong showing in electronics is unlikely to be sustained in the coming months.
“The electronics production side has been fairly strong over the last couple of months and the precision engineering industry, which tends to track the electronics segment, has also done well in August,” said Mr Brian Tan, a Southeast Asia economist at Nomura Singapore.
“Our fear, however, is that this outperformance is not something that’s particularly sustainable. It may be related to the product cycles of smartphones, which may not sustain after the initial rush to sell has passed. So we suspect that electronics production will peak sometime around the third quarter, which is around now, and may not be particularly strong going forward,” he added.
Looking ahead, one economist said slow global and trade growth is likely to weigh on external demand for Singapore’s manufacturing output, even amid loose monetary policy conditions in advanced economies.
“What we need to see is really two things,” said Mr Weiwen Ng, an economist for South and Southeast Asia at ANZ Research. “A first is a sustained pick-up in capital expenditure in the advanced G3 economies like US, Japan and Europe. The unfortunate thing is that despite very ultra-low interest rates in these economies, business fixed investment hasn’t picked up, and it’s weighed on Asia’s trade and manufacturing nexus.”
Despite the weak outlook, economists largely said they expect the Monetary Authority of Singapore to keep its exchange rate policy unchanged in the upcoming half-yearly meeting in October.
In April, the central bank had put the Singapore dollar on a zero appreciation stance.
Source: Government of Singapore