SINGAPORE - Singapore’s manufacturing output grew less than expected in September as production in the key electronics sector shrank for the third month in a row.
Total output rose 0.9 per cent year on year, according to data released by the Economic Development Board (EDB) on Wednesday. Excluding biomedical manufacturing, output rose by 2 per cent.
However, overall production fell short of the 1.2 per cent growth that analysts had predicted in a Bloomberg poll, though it was better than August’s 0.5 per cent anaemic rise, thanks to transport engineering and general manufacturing.
The electronics sector saw output drop by 7 per cent in September, after it shrank 7.8 per cent in August and 5.2 per cent in July. The industry, which is key to Singapore’s economic growth as it accounts for 40 per cent of the export-driven manufacturing sector, is facing a slump in global demand.
Singapore’s semiconductor output, which accounts for 80 per cent of electronics manufacturing, shrank 8.4 per cent in September, after falling in both July and August. Singapore supplies 11 per cent of the world’s semiconductors and 20 per cent of chipmaking equipment.
Output for the other electronic modules and components tumbled 29.1 per cent, while computer peripherals and data storage fell 15.2 per cent. The infocomms and consumer electronics segment, however, grew by 21.8 per cent.
OCBC Bank chief economist Selena Ling noted that big chipmakers like Texas Instruments and SK Hynix were the latest to sound a warning on the semiconductor market, with demand weakening for both personal devices and industrial equipment.
Hynix on Wednesday said memory chip prices fell 20 per cent over the last quarter and warned of “unprecedented deterioration in market conditions”.
Said Ms Ling: “Recent moves by the US administration to rein in chip exports to China are also weighing on the global chip industry’s outlook. This is despite the approaching year-end where peak Christmas orders should be beneficial for the order pipeline.”
Mr Alvin Liew, senior economist at UOB, said the slowing growth trend of Asia-Pacific semiconductor sales turned negative in August (minus 2.9 per cent) for the first time since January 2020, and is likely to turn more negative in the subsequent months, adding further evidence to the softening electronics outlook.
Chemicals output also declined in September, falling 7.1 per cent. The petroleum segment grew 12.1 per cent due to higher demand for jet fuel as global air travel restrictions ease. However, the specialities segment dipped 2.3 per cent, while the other chemicals segment saw a 12.7 per cent drop. The petrochemicals segment also saw output fall 14.7 per cent, due to plant maintenance shutdowns.
The transport engineering industry saw growth of 38 per cent in September. Marine and offshore engineering expanded 64.5 per cent, supported by higher levels of activities in the shipyards as well as increased production of oil and gas field equipment. The aerospace segment grew 36.4 per cent with higher demand for aircraft parts and more maintenance, repair and overhaul jobs on the back of increased global air traffic.
General manufacturing output grew 23.3 per cent year on year, with all segments recording an increase in output.
Manufacturing output expanded 3.9 per cent for the first nine months of 2022, but is likely to come in below the 3 per cent handle for the full year amid the growing economic headwinds, said Ms Ling.
Financial conditions are tightening as central banks tighten, and elevated inflationary pressures are eating into consumers’ pockets, she said.
“The Singapore economy will need the services sector to do the heavy lifting from here,” Ms Ling said.
