Industrial output blows away all expectations with 21% growth in July
Employees at a printed circuit board assembly factory in Singapore. Reuters file photo
SINGAPORE — Industrial output blew away all expectations in July, driven by growth in all six manufacturing clusters, with the stellar performance in electronics leading the way. Economists said the solid manufacturing performance will help underpin Singapore’s gross domestic product (GDP) growth this year.
Total manufacturing output increased 21 per cent last month from July a year ago, accelerating from the revised 12.7 per cent expansion in June, data from the Economic Development Board (EDB) showed on Friday (Aug 25). Excluding biomedical manufacturing, output grew 24.9 per cent. Economists in a Reuters poll had expected a 14 per cent year-on-year increase for July, thanks to the global electronics boom.
On a seasonally adjusted month-on-month basis, manufacturing output increased 1 per cent in July. Excluding biomedical manufacturing, output grew 4.9 per cent from a month earlier.
“Manufacturing kick-started the second half of the year with a bang, driven primarily by electronics and with all clusters posting growth in July,” said Maybank Kim Eng economists Chua Hak Bin and Lee Ju Ye.
With the manufacturing momentum in full swing, Mr Chua and Ms Lee expect third-quarter GDP growth at 3.5 per cent to 4 per cent. Meanwhile, full-year GDP growth is “well on track” to reach their 3 per cent forecast, at the upper bound of the Ministry of Trade and Industry’s recently upgraded 2 to 3 per cent forecast, they said.
In July, the electronics cluster — which accounts for close to one-third of total manufacturing in Singapore — grew a solid 49.1 per cent year-on-year, accelerating from the 25.9 per cent growth in June. Growth was helped by the semi-conductors, computer peripherals and infocomms as well as the consumer electronics segments.
UOB economist Francis Tan is optimistic of continued growth in the electronics cluster this year, but he added that the double-digit increase in semi-conductor production may “slow into the single digits as we proceed into the second half of the year, due to base effects and slower second-half capital expenditure growth expected in China.”
Dr Tan Khay Boon, senior lecturer at SIM Global Education, noted that while the upward trend in manufacturing production remained intact, the more moderated month-on-month growth showed some resistance in the continuity of the growth.
“While the demand for electronics output remains strong, the volatility in the pharmaceuticals production may exert downward pressure on the overall manufacturing performance ... Overall, barring unfavourable events such as a trade war between US and China, the near-term outlook of manufacturing can be considered stable,” he said.
The lumpy biomedical manufacturing cluster expanded for a second straight month in July at 5 per cent, but slowed from the 14.4 per cent growth in the previous month. The chemicals, precision engineering, transport engineering and general manufacturing clusters also posted year-on-year growth last month, at 4.8 per cent, 21.8 per cent, 2.3 per cent and 4.9 per cent, respectively.
