S’pore industrial production down for 9th month
A manufacturing and logistics facility in Singapore. TODAY file photo
SINGAPORE — Reflecting the persistent weakness in Singapore’s manufacturing sector, industrial production fell 5.4 per cent last month from a year earlier, data from the Economic Development Board showed today (Nov 26), as economists warned that uncertainties in China, the United States and the Eurozone will hurt prospects.
Last month’s contraction in industrial production was the ninth consecutive month of decline, deepening from the revised 4.7 per cent decline in September.
Largely a result of the slump in electronics and pharmaceuticals output, it was broadly in line with the 5.3 per cent contraction economists in a Reuters poll had expected.
The disappointing figures showed that the manufacturing sector will continue to weigh on economic performance in the fourth quarter, a day after the revised gross domestic product (GDP) figures released yesterday (Nov 26) showed the Singapore economy grew a much-better-than-expected 1.9 per cent in the third quarter on both a year-on-year and sequential basis. The solid third-quarter performance was due to services sector growth, while the manufacturing sector shrank 6.2 per cent year-on-year, accelerating from the 4.8 per cent decline previously.
“It’s such a sobering picture. Surely, this is a big cold bucket of water over the earlier better-than-expected third-quarter GDP growth figures. More importantly, this latest set of industrial production numbers also provides a glimpse of what lies ahead in the coming months,” said DBS senior economist Irvin Seah.
“All is not good in this regard. The global environment remains challenging. China is slowing and the US Federal Reserve is rushing to hike rates. Although the non-oil domestic exports for the same month came in with just a modest dip of 0.5 per cent year-on-year, that’s mainly due to valuation effects arising from the Singapore dollar depreciation.
“The latest set of industrial production figures is a reality check and it hurts,” he added.
UOB economist Francis Tan said: “Economic and political uncertainties plaguing the Eurozone, the United States and China — Singapore’s top exporting destinations — remain and will continue to drag on the confidence of manufacturers and exporters. In addition, Singapore’s still-tight domestic labour market remains a supply-side constraint for production.”
However, Mr Tan remains optimistic that there could be some pickup in manufacturing performance for next year.
“We expect economic conditions in the US to continue on an improving path. Better job numbers, stronger wage gains due to the tighter labour market, and a stronger US dollar will see the rise of consumption demand from the average American. Also, the effects from the low base this year will provide some support for growth,” he said.
Mr Tan has downgraded his industrial production forecast for this year to a 4 per cent contraction from the initial 2 per cent decline. For next year, he is predicting 2.5 per cent growth. Mr Seah forecasts industrial production to decline 3.9 per cent this year and grow 1.5 per cent next year.
Last month, four out of the six clusters — electronics, biomedical manufacturing, precision engineering and transport engineering — registered declines in output, with growth seen only from the chemicals and general manufacturing products clusters.
The key electronics cluster, which carries about one-third of the total weight in the industrial production index, contracted by 14 per cent, extending the 8.6 per cent decline in September.
The fall was mainly due to lower output from semiconductors, computer peripherals and infocomms and consumer electronics products.
The volatile biomedical manufacturing cluster contracted by 1.6 per cent last month due to a decline in output of pharmaceutical products, reversing from the double-digit 26.8 per cent expansion the preceding month.
