Singaporean industrial production contracts year-on-year in September, likely to ease further in Q4

Singaporean industrial production data comes in below expectations in September. On a year-on-year basis, industrial production contracted 0.2 percent, whereas it contracted 4.9 percent on a sequential basis in the month. The consensus expectations were for the industrial production to have grown 3.5 percent year-on-year and contract 1.8 percent sequentially. The data for August was upwardly revised to 3.7 percent year-on-year from the initial estimate of 3.3 percent year on-year. Today’s data marks the first year-on-year contraction since December 2017.

Electronics output fell surprisingly in the month, declining 5.5 percent amidst widespread softness in all electronics clusters except the infocomms & consumer electronics segment. This implies that the electronics turnaround continues to be slightly elusive for now. Biomedical manufacturing also shrank 9.7 percent year-on-year, dragged down by medical technology and pharmaceuticals. The sudden softness in pharmaceuticals is also concerning given the volatility.

Stripping biomedical manufacturing, output rose 1.9 percent year-on-year but shrank for the second straight month by 2.4 percent sequentially.

“Although industrial production had expanded by a relatively healthy 8.2 percent yoy for the first nine months of 2018, we tip 4Q18 manufacturing growth to ease further to around 3.4 percent yoy. This does not detract from our baseline scenario that full-year 2018 growth of 3.3 percent is likely still achievable”, stated Selena Ling, Head of Treasury Research & Strategy, OCBC Bank.