Factory output up 12.6%, beating expectations

Electronics output last month swelled 39.8 per cent year on year, on robust growth in the semiconductors segment.
Electronics output last month swelled 39.8 per cent year on year, on robust growth in the semiconductors segment.ST FILE PHOTO

Surge in electronics output and more positive global outlook offset dip in biomedical sector

The buoyant mood in manufacturing continues unabated as the sector logged yet another month of better-than-expected growth.

Factory output surged 12.6 per cent in February over the same month last year - stronger than economists' expectations of a 10 per cent rise.

The sector, which makes up one-fifth of the economy, is benefiting from a more sanguine global outlook and strong demand for electronics, particularly semiconductors.

While output in the volatile biomedical sector dipped, this was offset by a surge in electronics output, which swelled 39.8 per cent year on year.

This was mainly attributed to the semiconductors segment, which posted robust growth of 63.6 per cent, according to data from the Economic Development Board released yesterday.

DBS economist Irvin Seah said the numbers reflect stronger global electronics demand.

"As long as the global outlook continues to improve, growth performance in the electronics and related clusters should remain buoyant," he added.

Excluding biomedical manufacturing, which fell 2.6 per cent, overall factory output rose 17.1 per cent.

Other segments, including precision engineering, general manufacturing and chemicals, also expanded year on year.

However, the transport engineering cluster continued to contract. It shrank 9.6 per cent mainly due to poor sentiment in marine and offshore engineering, where low oil prices have weighed on rig-building activity as well as demand for oilfield and gasfield equipment.

Mr Seah said that the manufacturing sector as a whole is expected to continue picking up gradually, driven mainly by steadily rising demand from the United States and China.

But UOB economist Francis Tan warned that there are still clouds on the horizon.

"We need to be watchful of anti- globalisation antics from the developed world... (For instance), the Trump administration may start implementing import tariffs on goods from China, which Singapore exports a lot to," he noted.

Mr Sam Chee Wah, general manager of precision engineering company Feinmetall Singapore, said the company has seen a strong pickup in orders for the coming quarter.

Sales in the first three months of this year have also climbed 20 per cent compared with the same period last year, he added.

"The demand is largely coming from the consumer electronics and automotive sectors," said Mr Sam.

"Our industry does seem to be doing better... The semiconductor and precision engineering sectors have been seeing a strong pickup."

A version of this article appeared in the print edition of The Straits Times on March 25, 2017, with the headline 'Factory output up 12.6%, beating expectations'. Print Edition | Subscribe