Manufacturing output down a whopping 8%
August's showing is worst since December 2015
Singapore's factory output fell sharply again last month after short-lived hopes of a turnaround. It was bogged down by electronics praoduction that saw its biggest monthly slump since 2012 amid trade tensions.
Overall manufacturing output slid by 8 per cent from a year ago, down from a revised 0.1 per cent fall in July.
This marked its worst showing since December 2015, and the fourth straight month that output remained in negative territory.
The figure was sharply below expectations of a mere 0.6 per cent drop in a Bloomberg poll, heightening fears that the Republic would slip into a technical recession - or two straight quarter-on-quarter declines.
The gross domestic product shrank 3.3 per cent on a quarterly basis in the second quarter.
In the latest figures by the Economic Development Board (EDB), factory output was dragged down by poor performance in the electronics and precision engineering clusters.
Cumulatively, both make up just above 40 per cent of Singapore's industrial production, UOB economist Barnabas Gan said.
BIGGEST POINT SWING
CIMB Private Banking economist Song Seng Wun said semiconductors, which hold the most weight among the manufacturing sector's various product groups, saw the biggest two-month percentage point swing since 1996.
Maybank Kim Eng economists Chua Hak Bin and Lee Ju Ye attributed the fall in electronics to supply chain disruptions from the trade war, adding that Singapore does not seem to be benefiting from trade diversions for semiconductors, unlike Taiwan.
There are dark clouds ahead as well. The most recent wave of US tariffs, which went into effect on Sept 1, hit semiconductor media devices and Apple's Mac computers.
The next wave, starting on Dec 15, covers laptops and mobile phones. These will prove even more destructive for US consumer technology demand, they said.
With electronics slumping 24.4 per cent last month after holding up in July, OCBC Bank's head of treasury research and strategy Selena Ling said optimism for a recovery of the cluster was "likely premature".
Ms Ling said "ongoing weakness in manufacturing, especially electronics, is likely to sustain into the fourth quarter, especially with no conviction that a global demand recovery is round the corner".
Economists remain divided on whether the latest figures signal an impending technical recession, although they expect the Monetary Authority of Singapore to ease monetary policy next month.
Get The New Paper on your phone with the free TNP app. Download from the Apple App Store or Google Play Store now
