Singapore May output beats forecasts with 17.7% jump
Strong expansion in biomedical, transport engineering sectors
By CHUANG PECK MING
OUTPUT by Singapore’s factories jumped more than expected in May, as sales of oil rigs and drugs surged. The Economic Development Board reported yesterday that last month’s output rose 17.7 per cent from a year earlier, after a revised 19.6 per cent gain in April.
Analysts, who tipped May’s production to increase by 11 per cent, now expect a stronger showing in the second half of the year - thanks to a projected rebound in global demand for electronic products and stronger orders for big-ticket items like oil rigs.
‘The worst in the manufacturing sector is probably behind us, with the 4.3 per cent year-on-year print in Q1 national accounts representing the bottom of the mini-cycle,’ says Prakriti Sofat of HSBC bank. ‘With exports already starting their turnaround, the benefits are clearly beginning to flow into manufacturing - something we would expect to continue through the rest of the year.’
Taking a longer-run measure to get the underlying trend, HSBC found Singapore’s factory output has improved for two straight months - ‘currently running at 9.7 per cent well north of the 5-year average of around 7.5 per cent’.
From a month earlier, May’s industrial production also unexpectedly advanced a seasonally adjusted 4 per cent after a revised 8.5 per cent jump in April, confounding market expectations of a 2.4 per cent drop.
The EDB said May’s increase came from strong expansion in the biomedical and transport engineering sectors, making for weaker demand for electronic exports, which account for a quarter of Singapore’s manufacturing output.
Biomedical output - which makes up 22 per cent of manufacturing output - rose 76.2 per cent from a year earlier, while transport engineering posted a 39.5 per cent gain. Pharmaceuticals, a biomedical sub-sector, grew 82 per cent, and medical technology went up 39.3 per cent.
‘The growth (in pharmaceuticals) was due to a wider range of active pharmaceutical ingredients being manufactured and strong orders from the United States, European Union and Japan stimulated the high production of medical devices and appliances,’ the EDB said.
The main engine of growth in the transport engineering sector in May was the marine and offshore segment, where production was ramped up by 69.6 per cent to meet the delivery of ships and oil rigs. ‘A lot of strength came from transport and engineering, which was not really a surprise,’ said Vishnu Varathan, an economist at Forecast. ‘Demand for marine and offshore rigs has not abated and will continue to be strong going forward,’ he told Reuters.
Transport engineering output expanded a seasonally adjusted 22.3 per cent last month from April, outweighing an 11.5 per cent contraction in electronics.
From a year earlier, electronics production was flat in May. ‘The semiconductors and electronic components segments expanded while the other segments contracted,’ the EDB said.
Output in the infocomms and consumer electronics segment fell 11.6 per cent, with production cutback in mobile products and digital consumer electronics. Computer chips output rose 8.2 per cent, slowing from a revised increase of 18.3 per cent in April. Disk drives fell 8.6 per cent, after a revised 2.7 per cent decrease in the previous month.
‘While it is still lacklustre on the electronics side, we’re optimistic that that’s coming back on track in the course of the second half,’ David Cohen of Action Economics told Reuters. ‘Global demand should be supportive.’
Source: The Business Times, 27 June 2007
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