Factory output grows 2.2% last month, Latest Business News - The New Paper

Factory output grows 2.2% last month

This article is more than 12 months old

A dip in volatile biomedical output as well as a seasonal Chinese New Year slowdown contributed to a weaker-than-expected start to the year for Singapore manufacturers.

Factory output expanded 2.2 per cent last month compared with the same month a year earlier, disappointing economists who expected growth of 9.5 per cent.

However, they are optimistic that some segments of the sector will see robust growth.

Manufacturing, which makes up a fifth of our economy, has been experiencing a turnaround in recent months led by the electronics cluster.

Last month's numbers were dragged down by biomedical manufacturing, where output declined 13.5 per cent due to a drop in pharmaceuticals production.

The timing of the Chinese New Year holiday also distorted some year-on-year comparisons.

Output of food, beverages and tobacco shrank 10.8 per cent on the back of fewer production days last month as a result of Chinese New Year.

This weighed on the general manufacturing cluster, which saw production slide 13.8 per cent.

Others fared better.

The precision engineering cluster grew 24 per cent, while electronics production rose 14.8 per cent.

Maybank Kim Eng economists Chua Hak Bin and Lee Ju Ye said they are optimistic about the recovery in manufacturing.

"Electronics cycles have more 'persistence' qualities than biomedical production," they noted.

"We are encouraged that (export) data for January remained healthy, with electronics (shipments) to China and Taiwan especially strong."

Citi economist Kit Wei Zheng agreed the lift to manufacturing and trade-related industries is likely to persist but warned the impact is not being felt elsewhere. - THE STRAITS TIMES