Singapore Factory Output Up 14.6%

Singapore’s industrial production rose for a fifteenth straight month in October driven largely by growth in electronics output, data showed on Friday, raising concerns about an uneven recovery.

Manufacturing output in October rose 14.6% from a year earlier, data from the Singapore Economic Development Board showed, slower that the median forecast in a Reuters survey which predicted a 15.5% expansion. It grew a revised 14.4% in September from a year earlier, Reuters reported.

This comes a day after the city-state announced that its economy grew at its quickest in nearly four years in the third quarter, thanks to a boom in manufacturing that some analysts say will encourage a tightening in monetary policy next year.

Singapore and other trade-reliant economies in Asia have enjoyed a boost this year from an improvement in global demand, particularly for electronics products and components such as semiconductors.

Electronics output in October continued to show robust growth at 45.1% on-year after growing 33.1% in September. But the electronics-led growth in manufacturing raises concerns that Singapore’s growth is uneven as recovery remain slow in other sectors.

“I‘m still concerned that growth is still not broadbased,” said Nomura economist Brian Tan, adding that the narrowness of the growth “will not sustain” the stellar GDP numbers seen in the third quarter.

On a month-on-month and seasonally adjusted basis, industrial production rose 0.7% in October after a revised 1% contraction in September. The median forecast was for a rise of 1.5%.

“Sure, manufacturing and export growth appears to have been running strong, but... the month on month production data from Singapore have been unremarkable over the last three months,” said ING economist, Rob Carnell in a note to clients.

Analysts expect manufacturing numbers to start to moderate next year as electronics output starts to slow. “Cyclical forces that are at work to boost semiconductor demand and production may be waning, as the replacement-cycle for handheld communication devices matures,” Carnell said, adding countries such as China that assemble finished devices will benefit in the coming months.

Meanwhile, the transport engineering cluster’s output shrank 3.8% year-on-year. The aerospace segment grew 14.7%, whilst the land transport, and marine and offshore engineering segments fell 6.9% and 18.4%, respectively.

The output of the biomedical manufacturing cluster saw the largest decline at 24.2% year-on-year. The pharmaceutical segment’s 36.1% decline offset medical technology’s 13.7% increase.