S’pore’s factory output in July brightens with smaller decline
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Singapore’s factory output fell 0.9 per cent in July, an improvement from the 4.9 per cent drop in June.
PHOTO: ST FILE
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SINGAPORE – Factory output stayed in the doldrums in July – the 10th consecutive month of decline – but the marked improvement from June has fuelled hopes of a modest recovery.
Manufacturing production fell 0.9 per cent over July 2022, significantly better than June’s 4.9 per cent slump
July’s factory output came in higher than expected, with economists polled by Bloomberg tipping a 3.8 per cent decline.
There is a silver lining despite that overall decline, with all industry clusters, except precision engineering, general manufacturing and biomedical manufacturing, raising output.
If biomed figures are excluded, total output grew 6.9 per cent.
The transport engineering cluster was the outperformer, increasing production by 20.7 per cent in July over the same month in 2022, with the marine and offshore engineering segment leading the charge with a spike in output of 28.2 per cent.
The robust numbers were driven by higher demand for aircraft parts and maintenance and repair from commercial airlines on the back of greater global travel.
Electronics was another star performer, lifting output by 5.1 per cent, with the semiconductors and infocomms and consumer electronics segments buoyant, although other sub-segments were lacklustre.
July’s weakest performer was the biomedical manufacturing cluster, with output plunging 22.6 per cent over July 2022.
While the medical technology segment grew 2.5 per cent, supported by export demand for devices, output in the often-volatile pharmaceuticals sector fell 42.4 per cent on account of a different mix of ingredients being produced, compared with July 2022.
The chemical cluster was also in the growth column, with output up 2.3 per cent, allowing it to emerge from 11 months in the red.
General manufacturing was not so lucky, with production diving 8.5 per cent on the back of reduced production of batteries and structural metal products.
It was not much better for precision engineering firms, with output dropping 7.6 per cent year on year in July.
DBS Bank economist Chua Han Teng said a gradual recovery in manufacturing activity is on the cards in this half, but added: “The recovery will be fragile, given that the global economic environment remains challenging.”
He noted: “A similar picture is seen for electronics firms, which supports a gradual improvement in shipments and production in the months ahead.
“Global semiconductor sales are turning around, and there is medium-term optimism on (artificial intelligence)-related chips, even though lingering geopolitical tensions could still disrupt supply chains.”
Maybank economists Chua Hak Bin and Brian Lee tip gross domestic product (GDP) growth to come in at 0.8 per cent in 2023 and 2.2 per cent in 2024.
“A sharp China slowdown remains a risk, but we are comforted by positive growth in China’s overall import demand,” they noted. “China will likely relax some housing and credit measures, and unveil some modest fiscal policies to support domestic demand.”
UOB senior economist Alvin Liew expects Singapore’s full-year GDP growth to be 0.7 per cent in 2023, reflecting a more cautious global economy and a pensive manufacturing recovery.
