Factory output up 22%, fastest pace in 13 months
July manufacturing production beats expectations but electronics still flat
By Erica Tay, Economics Correspondent
SINGAPORE’S manufacturing output grew 21.6 per cent last month - its fastest pace in 13 months and a sharp recovery from June’s slump - to beat expectations.
Market expectations were muted after the manufacturing sector shrank a revised 7.3 per cent in June.
Last month’s output far exceeded the median market forecast of 3.3 per cent growth by economists in a Bloomberg poll.
Economic Development Board (EDB) data released yesterday showed that a sharp upswing in typically volatile biomedical production lifted last month’s factory output.
Output from the biomedical industry - dominated by pharmaceuticals - surged 78 per cent, after falling 45 per cent in June and jumping 75.8 per cent in May.
For the first seven months of the year, manufacturing output was up 8.9 per cent.
‘ ‘Wow!’ would probably be just right to describe July’s manufacturing expansion at first glance,’ said United Overseas Bank (UOB) economist Alvin Liew.
On closer examination, however, the showing by different industries within manufacturing last month was mixed.
Although drug factories rebounded impressively and shipyards rode on a sustained boom in rig and shipbuilding, electronics growth was flat.
Chemical production shrank, while precision engineering and general manufacturing enjoyed modest growth.
The biomedical industry made up a quarter of the manufacturing sector’s contribution to the economy last year, while electronics accounted for nearly 30 per cent.
Electronics production was up only 0.2 per cent last month, as a long-awaited recovery in global tech demand has yet to materialise.
‘Although the semiconductor segment grew 5.2 per cent, the growth was moderated by a slowdown in the other segments,’ the EDB said in its report.
Meanwhile, business continued to boom in all areas of transport engineering.
Marine and offshore players saw a 37.4 per cent rise in output, while aircraft repair and maintenance firms, as well as land transport manufacturers, reported production rises of more than 20 per cent.
So far, output from the transport engineering sector has climbed 28 per cent.
The chemicals cluster, however, suffered a 2.2 per cent drop, largely because some refineries and petrochemical plants were shut last month for planned maintenance work.
Last month’s strong performance is unlikely to be sustainable, argued UOB’s Mr Liew.
‘Should we upgrade based on the excellent July data? We think not, at least not now,’ he reckoned, citing weak export demand, a slower-than-expected tech recovery and the volatile nature of biomedical output.
Source : Straits Times - 25 Aug 2007
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