August’s factory output expands 0.1%, lags forecast

SINGAPORE — Manufacturing output rebounded into growth territory last month, boosted by the electronics, chemicals and precision engineering clusters, but the reading fell short of economists’ expectations as grey clouds continued to loom.

Industrial production grew 0.1 per cent in August from the same month last year, recovering from the revised 3.5 per cent contraction in July, showed data from the Economic Development Board (EDB) yesterday. The reading was lower than a 0.6 per cent expansion forecast by economists in a Reuters poll.

“The strong electronics output coincided with the better-than-expected August export orders in Taiwan that were released last week, boosted by electronics exports. Over in the United States, telcos such as T-Mobile and Sprint Corp reported that they had received almost four times as many orders for the iPhone 7 compared to previous models and this will likely boost the demand for semi-conductors in the months ahead,” said UOB economist Francis Tan.

“However optimistic the electronics cluster may be, it is only 27.4 per cent of total manufacturing activities. Concerns on the still-weak export conditions, particularly the uncertainty involving Brexit and its impact on Singapore’s exports to the European Union, will mar the prospects on other manufacturing clusters (more specifically for a Eurozone dependent biomedical manufacturing cluster). Moreover, the transport engineering cluster still remains in the doldrums,” he added.

Last month, output in the electronics cluster jumped 10.8 per cent on a year-on-year basis, led by the 19.7 per cent growth in semi-conductor production. The chemicals and precision engineering clusters expanded 1.8 per cent and 11.6 per cent, respectively, helped by growth in the production of petroleum, specialty chemicals, machinery and systems.

Meanwhile, the output of biomedical manufacturing, transport engineering and general manufacturing products contracted 8.4 per cent, 16.8 per cent and 1.6 per cent, respectively. On a seasonally adjusted month-on-month basis, manufacturing output was unchanged in August, EDB data showed. ANGELA TENG