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Singapore's manufacturing output jumps 13% in June, beating forecast

SINGAPORE — Led by the electronics and biomedical clusters, Singapore’s manufacturing output beat expectations with a double-digit expansion last month.

Manufacturing output beat expectations in June 2017 with a double-digit expansion. Growth was led by the electronics and biomedical manufacturing clusters. TODAY file photo

Manufacturing output beat expectations in June 2017 with a double-digit expansion. Growth was led by the electronics and biomedical manufacturing clusters. TODAY file photo

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SINGAPORE — Led by the electronics and biomedical clusters, Singapore’s manufacturing output beat expectations with a double-digit expansion last month.

The strong showing from manufacturing has prompted several economists to expect an upgrade in the final second quarter gross domestic product (GDP) print to between 2.8 per cent and 3 per cent on a year-on-year basis, up from the advance estimates of 2.5 per cent.

Total manufacturing output increased 13.1 per cent last month from a year ago, accelerating from the revised 4.4 per cent expansion in May, data from the Economic Development Board (EDB) showed on Wednesday (July 26). 

Economists in a Reuters poll had expected a 7.6 per cent year-on-year increase for last month, underpinned by a global electronics boom. 

Excluding biomedical manufacturing, output grew 11.9 per cent. Overall, manufacturing output for the first half of this year grew 8.3 per cent year-on-year. Advance estimates earlier this month showed manufacturing growth for the first and second quarter at 8.5 per cent and 8 per cent, respectively.

The latest strong industrial production performance should prompt an upward revision in overall GDP final figures for the second quarter, said several economists.

“Based on the most recent official projection, the economy is expected to have expanded by 0.4 per cent on a quarter-on-quarter seasonally adjusted annualised basis and 2.5 per cent year-on-year. We reckon that the figures will be revised up nearer to 3.0 per cent year-on-year for the second quarter,” said DBS senior economist Irvin Seah.

Maybank Kim Eng economists Chua Hak Bin and Lee Ju Ye expect Singapore’s second quarter growth to be upgraded to 2.8 per cent given a stronger manufacturing and a broadening recovery to the financial, business and wholesale and retail trade services.

“More manufacturing engines fired up last month, including pharmaceuticals and transport engineering. The broadening manufacturing recovery beyond electronics is improving the second half outlook. The electronics recovery remains robust, with semiconductors continuing to lead the charge,” Mr Chua and Ms Lee said.

Going forward, Mr Seah expects industrial production to moderate in the later part of the year amid weaker consumer demand from China. The tightened policy regulations could indirectly impact the local manufacturing sector, he said.

Last month, five out of the six clusters — electronics, biomedical manufacturing, chemicals, precision engineering, transport engineering — grew from a year ago. The general manufacturing cluster meanwhile, fell 5.3 per cent last month, compared with the 9.0 per cent decline in May.

The electronics cluster expanded by 25.5 per cent last month, mainly attributed to the semiconductors segment which posted a robust growth of 37.4 per cent.

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