Singaporean manufacturing output falls sharply in January, likely to remain soft in months ahead

Singaporean manufacturing output dropped in January. On a year-on-year basis, manufacturing output fell 3.1 percent in the month, consistent with the Bloomberg consensus expectations of a fall of 3.1 percent. This is the softest year-on-year performance and the first negative year-on-year figure since December 2017. Sequentially, the manufacturing output rose 0.9 percent year-on-year in January.

The year-on-year fall was mainly driven by electronics whose output fell 13.7 percent year-on-year in the midst a softer performance throughout most electronics segments except for electronics modules & components. In tandem, precision engineering output also fell 15.7 percent year-on-year, dragged by machinery & systems segment due to semiconductor equipment, as well as precision modules & components.

Stripping biomedical manufacturing, the headline output dropped 5.9 percent year-on-year and 0.4 percent sequentially. Biomedical output rose 10 percent in January, lifted by pharmaceuticals because of higher production of active ingredients and biological products.

Transport engineering recovered by rising 20.2 percent year-on-year, in particularly with a stronger performance in marine & offshore engineering in the midst of a rebounded work pipeline for offshore projects and shipbuilding & repairing, as well as aerospace.

Given the soft beginning to the manufacturing momentum in January, 2019 manufacturing growth might continue to be weak in the months ahead which might be a drag on GDP growth in the first quarter in 2019, noted Selena Ling, Head of Treasury Research & Strategy, OCBC Bank.

“February in particular will be a seasonally slow period given the CNY festive holidays. Barring a quick resolution to the US-China trade war, regional manufacturing and trade activities may remain lacklustre”, added Selena Ling.