Singapore factory output extends rebound, rising 8.6% in January

On a seasonally adjusted month-on-month basis, manufacturing output increased 4.6 per cent in January. - ST

SINGAPORE (The Straits Times/ANN): Singapore's manufacturing output continued expanding last month, driven mainly by electronics and precision engineering.

Factory output rose 8.6 per cent year on year in January for a third straight month of growth, according to data released on Friday (Feb 26) by the Economic Development Board (EDB).

This came in below the upwardly revised 16.2 per cent growth rate in December last year, but topped the 3.6 per cent forecast of analysts in a Bloomberg poll.

Excluding biomedical manufacturing, output grew 12.1 per cent.

The key electronics cluster saw output rise 19.8 per cent. All segments recorded output growth except infocomms and consumer electronics.

The semiconductors segment, in particular, surged 23.8 per cent, buoyed by demand from cloud services, automotive and 5G markets, noted EDB.

OCBC Bank economist Howie Lee said the global chip shortage is the biggest reason why Singapore’s industrial production could continue to outperform in the near-term.

“Semiconductors, in particular, are in severe shortage due to increased work-from-home trends, the supply chain disruptions from the 2019 US-China trade war and years of prior destocking and underinvestment, ” he said.

The precision engineering cluster also grew by 15.3 per cent, driven by the machinery and systems segment which surged 20.2 per cent due to higher production of semiconductor equipment.

The precision modules and components segment rose 4.9 per cent with increased production of metal precision components and optical products.

Likewise, the chemicals cluster expanded 9 per cent with all segments recording output growth except the petroleum segment.

The "other chemicals" segment rose 23.2 per cent owing to higher output of fragrances, while the specialities segment grew 13.5 per cent with higher production of industrial gases and additives.

The general manufacturing cluster was up 3.3 per cent, with most of the growth coming from the miscellaneous industries segment that rose 7.6 per cent on higher production of wearing apparel and batteries.

The food, beverage and tobacco segment grew 2.4 per cent due to higher production of beverage products. However, the printing segment fell 4.5 per cent.

Other clusters fared weaker.

Biomedical manufacturing output shrunk 8.6 per cent, dragged down by the pharmaceuticals segment that slipped 16.7 per cent due to a different mix of active pharmaceutical ingredients.

The medical technology segment grew 15.2 per cent on the back of higher export demand for medical devices.

Meanwhile, transport engineering output fell 19 per cent. The 36.2 per cent growth in the land segment, due to higher output of motor vehicle parts and accessories, was offset by the continued slump in the marine and offshore engineering, as well as the aerospace segments, which fell 13.1 per cent and 30.6 per cent respectively.

"The levels of activity in the shipyards and aerospace firms remained low as new orders were adversely impacted by weak global oil and gas market and travel restrictions respectively," said EDB.

On a seasonally adjusted month-on-month basis, manufacturing output increased 4.6 per cent in January. Excluding biomedical manufacturing, output fell 1.1 per cent.

UOB economist Barnabas Gan said sectors that had previously seen a full-year contraction, such as transport engineering and general manufacturing, could revert to positive growth on the back of economic recovery this year amid potentially higher oil prices.

“Singapore being a trade-reliant economy, will also benefit from the expected recovery in the global external environment as domestic manufacturers gear up to meet the uptick in international demand.” - The Straits Times/Asia News Network

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