Singapore factory output falls 3.4% in September, snapping 10 months of growth

The key electronics sector saw output expand by 4.9 per cent. PHOTO: ST FILE

SINGAPORE - Singapore's factory output dropped in September, snapping 10 consecutive months of growth, on the back of weaker biomedical production.

Manufacturing output fell 3.4 per cent last month from a year ago, compared with a revised 11 per cent increase in August, according to data released by the Singapore Economic Development Board (EDB) on Tuesday (Oct 26).

Excluding biomedical manufacturing, output grew 9.4 per cent in September.

Maybank Kim Eng economists Chua Hak Bin and Lee Ju Ye said last month's contraction was likely a blip due to last year's high base in the pharmaceuticals segment.

"We expect manufacturing growth to return to positive territory in October, although growth will likely be in the single-digit pace as semiconductors are likely operating near full capacity."

UOB economist Barnabas Gan, likewise, pointed to last year's high base when Singapore responded to high demand for biomedical-related products amid the pandemic.

Ms Selena Ling, OCBC Bank's chief economist and head of treasury research and strategy, said: "The bigger concern in our view would be the perfect storm of a China growth slowdown story, energy price crunch, persistent global supply chain disruptions and regulatory policy clampdown that could dampen regional demand-supply dynamics."

Singapore's key electronics sector saw output expand by 4.9 per cent in September, slowing from the 15.4 per cent growth in August. Apart from the computer peripherals and data storage segment, all segments recorded output growth.

The electronics cluster grew 17.7 per cent from January to September compared with the same period last year.

Meanwhile, the volatile biomedical manufacturing sector saw its output fall 35.9 per cent, after a 1.7 per cent drop the previous month.

While the medical technology segment rose 2.4 per cent amid sustained export demand for medical devices, the pharmaceuticals output sank 46.2 per cent due to a different mix of active pharmaceutical ingredients being produced compared with a year ago.

Dr Chua and Ms Lee noted that pharmaceutical production is inherently volatile, but added: "We expect pharma to grow in the low single digit over the (rest of the) year, averaging out the volatility."

On a year-to-date basis, the biomedical manufacturing cluster still eked out growth of 1.4 per cent.

General manufacturing output also fell, by 2.7 per cent.

The miscellaneous industries segment grew 21 per cent from a low base last year, when demand for construction-related materials was adversely affected by Covid-19.

Conversely, the printing segment dropped 14.5 per cent while the food, beverage and tobacco segment fell 16 per cent, with lower production of milk products due to plant maintenance shutdowns and weaker export demand.

Overall, general manufacturing output grew 6.8 per cent in the first nine months of 2021, compared with the same period last year.

All other sectors posted year-on-year growth in September.

The transport engineering cluster saw expanded output of 12.9 per cent and cumulatively, grew 5.6 per cent year on year in the period lasting from January to September.

Precision engineering output also grew, by 30.2 per cent, in September. The cluster's growth was largely attributed to the machinery and systems segment, which expanded 38.4 per cent with higher output of semiconductor and industrial process equipment.

Overall, the precision engineering cluster grew 21 per cent in the first nine months of 2021.

Chemicals output increased by 12.4 per cent in September, with all segments recording output growth except the specialities segment.

The chemicals cluster grew 9.6 per cent year on year from January to September this year.

UOB economist Barnabas Gan said the expansion in export demand seen year to date is expected to persist for the rest of 2021: "This suggests that manufacturing momentum will likely stay supported, on the back of healthy global semiconductor demand, which would benefit the electronic and precision engineering clusters."

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