Singapore’s factory output dropped, snapping 10 consecutive months of growth

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Apex Foodworks

Factory output in Singapore fell in September, ending a streak of ten consecutive months of increase, due to decreased biomedical manufacturing.

Data issued by the Singapore Economic Development Board shows that manufacturing production declined 3.4 percent in September compared to a revised 11 percent growth in August (EDB).

In September, production climbed by 9.4 percent, excluding biomedical manufacturing.

Maybank Experts at Kim Eng believe that last month’s decline in pharmaceutical sales was attributable to a high base from the previous year.

Despite this, we anticipate manufacturing growth to return to positive territory in October, although growth is likely to be in the single digits since semiconductors are likely functioning at full capacity.

When Singapore reacted to a spike in demand for biomedical items during the pandemic last year, UOB economist Barnabas Gan highlighted to the high base that existed at the time.

“The bigger thoughts in our perspective would be the perfect storm of a slowdown in China growth, energy price crunch, persistent international supply chain regulatory and disruptions policy clampdown that could restrict regional demand-supply dynamics,” said Ms Selena Ling, OCBC Bank’s chief economist and head of treasury research and strategy.

In September, production in Singapore’s main electronics industry grew by 4.9 percent, down from the 15.4 percent rise seen in August. All other areas, except for computer peripherals and data storage, saw an increase in production.

From January to September, the electronics cluster expanded by 17.7% over the same time the previous year.

After a decline of 1.7% in the previous month, the volatile biomedical manufacturing sector saw its production plunged by 35.9%.

While the medical technology sector grew 2.4%, pharmaceutical production fell by 46.2% owing to a different mix of active pharmaceutical components being manufactured compared to last year.

According to Dr. Chua and Ms. Lee, “We anticipate pharma to increase in the low single-digit for the (rest) of the year, averaging out the volatility,” they said.

The biomedical manufacturing cluster has only grown by 1.4% so far this year.

There was a 2.7 percent drop in general industrial production as well.

Covid-19 had a negative impact on demand for construction-related products, which pushed the miscellaneous industries section up 21%.

On the other hand, the printing and food, beverage, and tobacco sectors also dipped 14.5 percent and 16 percent respectively, owing to plant maintenance shutdowns and reduced export demand for dairy goods. A few developers also start to build more food factories such as Apex Foodworks to fulfill demand from food processing and central kitchen.

The first nine months of 2021 saw a 6.8% increase in general industrial production compared to the same time last year.

September saw year-over-year increase in all other sectors.

In the first nine months of the year, the transportation engineering cluster experienced a 12.9 percent increase in production and a 5.6 percent year-on-year increase in total output.

In September, the production of precision engineering surged by 30.2%. Manufacturing and systems accounted for 38.4 percent of the cluster’s growth, driven by increased production of semiconductor and industrial process equipment.

In the first nine months of 2021, the precision engineering cluster expanded by a total of 21 percent.

All chemical segments save the specialty sector had a rise in production in September, with the exception of the specialty segment.

From January to September of this year, the chemicals cluster increased by 9.6 percent year-over-year.

Export demand growth, according to UOB economist Barnabas Gan, is likely to continue for the remainder of 2021: In light of strong global semiconductor demand, production momentum is projected to continue, which would assist the electronic and precision engineering clusters.

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