Singapore Factory Output Up

Singapore’s industrial production likely expanded at a faster pace in April compared with the year earlier, buoyed by an upward swing in pharmaceuticals output, a Reuters poll showed on Wednesday.

A Reuters poll of 10 analysts forecast manufacturing output in April will rise 8.3% from a year earlier. “It’s going to be because of the base effects in the pharmaceuticals cluster. We suspect it’s going to look very similar to what happened with exports in April,” said Brian Tan, economist, Nomura.

A pick up in pharmaceuticals helped offset five consecutive months of decline of electronics exports, leading to an unexpectedly sharp rise in exports year-on-year.

Manufacturing and exports of electronics were one of Singapore’s main drivers of growth last year, leading to an increase of 3.6% in GDP in 2017, and marking the fastest pace in three years.

Analysts and policymakers are concerned that the city-state’s growth is heavily dependent on its electronics sector, and that the growth in pharmaceuticals industry is not necessarily a positive factor for the outlook due to its volatile nature.

“One of the problems with pharmaceuticals is that it is very volatile, if you look at its growth patterns from last year, you can see it is going to reverse in June... the numbers may not look so good,” Tan said.

Manufacturing output in the city-state is also seen growing from the previous month in April, at 1.2% on a seasonally adjusted basis, according to the poll’s median forecast.

In March, Singapore’s industrial production grew better than expected at 5.9% year-on-year, and 0.3% from the month before on a seasonally adjusted basis.

Meanwhile, Singapore’s headline inflation rate fell to 0.1% in April compared to the 0.2% recorded in March, according to the Monetary Authority of Singapore and Ministry of Trade and Industry on Wednesday, CNA reported.

The drop was due to smaller increases in the prices of retail items, electricity and gas, and a “steeper fall” in the cost of private road transport, said the authorities.

Overall cost of retail items rose by 0.9% in April, lower than the 1.3% increase in March, due to a steeper year-ago decline in the prices of personal care products as well as recreation and entertainment goods.

Cost of private road transport fell by 0.8% in April, larger than the 0.6% decline in March.