Manufacturing growth in S'pore slows to 7.4%

ING Asia-Pacific economics team said in an analysts' note that Singapore's industrial production growth "is very clearly peaking out".
ING Asia-Pacific economics team said in an analysts' note that Singapore's industrial production growth "is very clearly peaking out".ST FILE PHOTO

But figure for June still better than economists' forecast of 3.3% rise

Singapore's manufacturing sector grew in June, despite ongoing trade tensions.

Industrial production rose 7.4 per cent on the previous year, with growth in all clusters, according to data from the Economic Development Board released yesterday.

While manufacturing growth eased from May's 12.9 per cent surge, it still beat economists' more downbeat consensus forecast of a 3.3 per cent increase.

Still, there may be choppy waters ahead, with electronics growth moderating from its sterling showing the previous year as storm clouds gather in the outlook for global trade.

"The flash second-quarter gross domestic product estimate had already pointed to weak manufacturing sector performance; the June industrial production data confirms this," said Mr Benjamin Shatil, an economist at JP Morgan.

He added that the JP Morgan forecast anticipates "some recovery" into the third quarter, assuming that smartphone-related demand picks up and developed market capital expenditure stabilises.

Also, the upcoming Purchasing Managers' Index survey of manufacturing sentiment, he said, would help to determine if demand is indeed stabilising after a softer second quarter.

The ING Asia-Pacific economics team said in an analysts' note that industrial production growth "is very clearly peaking out".

"But there are too many unanswered questions to make a confident prediction of what happens over the rest of this year and next," the ING economists added. "There is also little that domestic policy can do to swing the trend around."

An early warning sign came from June's non-oil domestic exports, which posted a subdued year-on-year growth of 1.1 per cent.

 
 
 

Excluding the seasonally volatile biomedical manufacturing cluster, output grew by 5.9 per cent year-on-year in June. Biomedical manufacturing gave overall manufacturing performance a fillip, expanding by 13.8 per cent.

But the lustre may be fading in the powerhouse electronics cluster. Output expanded by 7.1 per cent - a drop from the previous month's 18.7 per cent jump - with growth in semiconductors, other electronic modules and components, and infocomms and consumer electronics.

The semiconductor segment's growth of 10.2 per cent was a sharp drop from the 29 per cent expansion notched the previous month.

The transport engineering cluster's output was up by 12.4 per cent, fuelled by a 28.3 per cent jump in the marine and offshore engineering segment on offshore project recovery.

A smaller boost came from the 4.8 per cent growth in the aerospace segment, on strong engine repair and maintenance work volume from commercial airlines.

This, despite the 28.1 per cent slide in land transport output.

Precision engineering production rose by 2.7 per cent, with the precision modules and components segment growing by 15.4 per cent, thanks partly to higher optical instrument production for export.

This took place even as the machinery and systems segment slipped by 3.7 per cent.

A version of this article appeared in the print edition of The Straits Times on July 27, 2018, with the headline 'Manufacturing growth in S'pore slows to 7.4%'. Print Edition | Subscribe