Singapore’s industrial production exceeds expectations year-on-year in September

Singapore’s industrial production grew above expectation in the month of September. Industrial production grew 14.6 percent year-on-year; however, it dropped 0.5 percent sequentially. This is moderation from the 19.1 percent rate recorded in August; however, this gives slight relief after the unexpected NODX contraction in September. The manufacturing output in September also marked the fourth consecutive month of double-digit year-on-year growth, and surpassed expectations of 13.9 percent year-on-year rise. For the initial nine months of this year, manufacturing performance was a stellar 11.8 percent.

Electronics output continued to drive the overall headline figure, surging 33.2 percent year-on-year in September. Excluding the biomedical sector that is traditionally more volatile, manufacturing output expanded 16.1 percent year-on-year. The biomedical sector grew 8 percent year-on-year, lifted by medical technology due to increased export demand for medical devices and pharmaceuticals on the back of higher biological product production.

The transport engineering cluster was the main laggard that dropped 10.8 percent year-on-year in the month. The aerospace industry growth was not enough to counter the drags from offshore & marine and land transport segments. This tilted picture is expected to continue for the rest of 2017, noted OCBC Bank in a research report. Momentum in the manufacturing sector is expected to moderate slightly in the fourth quarter, partially due to higher base last year.

“We stick to our view that full-year GDP growth could come in around 3.3 percent yoy, assuming that 4Q17 growth slows back to around a 3 percent yoy pace as manufacturing momentum normalizes from the heady 3Q17 pace back to a single-digit growth speed”, stated Selena Ling, Head of Treasury Research & Strategy, OCBC Bank.

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