Singapore manufacturing output beats forecasts with 4% rise in October

Singapore's factory output increased 4 per cent in October year on year, according to figures released by EDB on Nov 26, 2019. PHOTO: ST FILE

Singapore's manufacturing output defied gloomy predictions for October as the slumping electronics sector eked out growth and pharmaceutical production jumped.

Factory output increased 4 per cent last month year on year, according to figures released by the Economic Development Board yesterday.

Even without biomedical manufacturing, output grew 0.2 per cent.

September's slight 0.1 per cent growth was also revised upwards to 0.7 per cent.

Last month's performance was far better than what economists expected, with a Bloomberg poll tipping a fall in output of 1.4 per cent year on year.

United Overseas Bank economist Barnabas Gan said: "The strong uptick in October manufacturing growth reinforces our expectation that Singapore's industrial production may have already bottomed in the third quarter of this year."

Growth came on the back of an expansion in biomedical manufacturing, which saw output surge by 24 per cent.

CIMB Private Banking economist Song Seng Wun said: "We are used to seeing the last two to three months of the year having far more volatility in the pharmaceutical sector, perhaps because of plant maintenance and batch production. What we may be seeing now is more continuous production, which allows it to have more stable output and far less swing."

Electronics manufacturers saw growth of 0.4 per cent last month, year on year. The infocomm and consumer electronics segment grew the most at 23.8 per cent.

Semiconductor output declined 0.9 per cent, but this was much better than the double-digit percentage drops in previous months.

For the first 10 months of this year combined, though, the electronics cluster's output declined 6.5 per cent, compared with the same period last year.

"These sectors were previously dragged by the lacklustre semiconductor-related production and export demand," said Mr Gan. But he said there were signs the contraction of semiconductor sales in the Asia-Pacific was moderating, which could point to further positive growth.

Mr Song added: "Chip-makers have said that demand has stabilised in some areas and we see improvement in chip equipment sales. The new gadgets driven by 5G technology in various countries may have also helped."

General manufacturing also saw output increase by 7.3 per cent year on year. The food, beverages and tobacco segment grew 14.2 per cent.

The precision engineering cluster grew 3.4 per cent, with the precision modules and components segment expanding 9.9 per cent with higher production of metal precision components and optical products. But the machinery and systems segment fell 1.7 per cent.

Some clusters recorded declines, with the transport engineering cluster seeing output fall by 2.4 per cent.

Chemicals output also dropped 9.6 per cent. The petroleum segment grew 3 per cent but this was offset by lower production in the rest of the chemicals segments.

OCBC Bank head of treasury research and strategy Selena Ling said: "The positive growth is encouraging but much still depends on 2020 global growth prospects and the US-China trade and tech war progress."

Mr Song said: "There is room for optimism especially from January 2020 onwards where the low base will be even more significant, but all these things can materialise only if (consumer) confidence remains and the trade fight does not escalate."

Last week, Minister for Trade and Industry Chan Chun Sing also cautioned that it is premature to say that the worst may be over for the Singapore economy, as many uncertainties remain.

Follow ST on LinkedIn and stay updated on the latest career news, insights and more.

A version of this article appeared in the print edition of The Straits Times on November 27, 2019, with the headline Singapore manufacturing output beats forecasts with 4% rise in October. Subscribe