Singaporean industrial production grows above expectations in November, likely to ease slightly in Q1 2019

The Singaporean industrial production grows above expectations in November. On a year-on-year basis, manufacturing output rose 7.6 percent, whereas it rose 2.8 percent on a sequential basis. However, this was off a relatively lower base a year ago. This also marks a rebound from the October’s growth pace of 5.5 percent year-on-year. Excluding biomedical output, manufacturing output rose 5.3 percent year-on-year, but was flat on a sequential basis. For the initial 11 months, manufacturing output grew 7.6 percent year-on-year.

The rebound in November was driven by biomedical output, which rose 18.5 percent year-on-year, especially led by pharmaceuticals and transport engineering and electronics. The transport engineering cluster has advanced from the marine & offshore engineering segment in the midst a low base a year ago, which strengthened the story that the industry has likely troughed and is gradually turning the corner, noted Selena Ling, Head of Treasury Research & Strategy, OCBC Bank.

In the meantime, the electronics cluster also recorded better output from semiconductors, infocomms & consumer electronics and other electronics modules & components respectively, albeit computer peripherals and data storage remained lacklustre.

Looking ahead, the December 2017 base is not very challenging at -2.4 percent, so with only one month of data left, the fourth quarter manufacturing growth is largely in the bag, hence there is some upside risk to the fourth quarter GDP growth estimate.

“That said, we do expect 1Q19 to see some sequential seasonal moderation in manufacturing momentum. The stronger than expected 4Q18 manufacturing growth theme may not logically carry over into 2019, since some of the frontloading activities due to the US-China trade tensions may subside going forward and especially given the relatively high base in 1Q19”, added Selena Ling.