Singaporean industrial production moderates in March, likely to ease further in Q2 2018

Singaporean industrial production moderated in March. Industrial output rose 5.9 percent year-on-year, as compared with February’s downwardly revised growth of 6.7 percent. On a sequential basis, industrial production rose 0.3 percent, as compared with a fall of 2.6 percent recorded in February. The moderation on a year-on-year basis was expected, partially because of the high base in March last year; however, it came in above consensus projection of 5.7 percent. This has brought the first quarter manufacturing growth to 9.8 percent, which is a sound beginning for 2018, noted Selena Ling, Head of Treasury Research & Strategy, OCBC Bank.

The industrial production growth was mainly driven by electronics, which rose 12.4 percent year-on-year in the month, bringing the first quarter growth to 19.2 percent year-on-year. The main driver was semiconductors, which more than countered the contractions seen in data storage, infocomms & consumer electronics and other electronics modules & components. The volatile biomedical manufacturing cluster was the main drag, whose output dropped 5.4 percent, weighed down by pharmaceuticals. Excluding biomedicals, manufacturing output grew 8.6 percent.

Given the slightly easier base effects for April-May 2017, the rate of industrial production growth might accelerate again in the next two months.

“Nevertheless, we tip manufacturing production growth to ease further to around 7.9 percent yoy in 2Q18 and slow further into 2H18. Our full-year manufacturing growth forecast is 4.5 percent yoy, which is roughly only half the pace seen in 2017”, said Selena Ling.

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