JAKARTA - IHS Global Insight has just released its latest review on Singapore manufacturing output data. Followings are the key points of the review:
Key Points:
- Singapore’s manufacturing output showed a strong rebound in April, rising 2.9% year-on-year (y/y), with a 4.8% month-on-month (m/m) increase.
- Electronics output rose 10.9% year-on-year, reflecting a 24.2% y/y increase in output of semiconductors.
- Biomedical manufacturing also performed strongly, with output up 14.9% y/y, helped by a 17.7% rise in pharmaceuticals output. Medical technology output also rose 5.4% y/y, boosted by stronger exports of medical devices.
- As expected, the marine and offshore engineering sector remained in a deep slump, with output down 21.7% y/y. However, the aerospace engineering sector performed strongly, up 12.4% y/y.
- The chemicals industry cluster recorded a 4.3% y/y decline in output, reflecting an 11.4% drop in petroleum products output and a 16.4% decline in petrochemicals output, although these declines were mainly due to routine plant maintenance shutdowns.
Near-term Outlook:
The latest manufacturing output data for April showed a strong monthly rebound in output, with strong cumulative output increases for January-April 2016 compared to the same period a year ago in electronics and biomedical manufacturing, as well as aerospace engineering. However, Singapore’s manufacturing sector still faces considerable headwinds from the slump in world oil prices and deep cuts in exploration and development budgets for oil and gas companies, which has hit the marine and offshore engineering sector hard throughout 2015 and in the first half of 2016.
Continued moderate economic expansion in the US and EU should support the electronics and biomedical manufacturing sectors during the remainder of 2016. However, a key risk to the outlook is the sluggish pace of growth in China’s manufacturing industry, which has had negative transmission effects to the East Asian manufacturing supply chain and has hit the manufacturing exports of many Asian nations. This has been evident in the first quarter of 2016, when Singapore’s non-oil domestic exports fell by 9.0% y/y, with exports to China falling by 14.6% y/y. The downside risk of a China hard landing remains a key risk to the medium-term economic outlook for the East Asian region, which is more vulnerable to a further Chinese economic slowdown than other major economies such as the US or EU.
By Rajiv Biswas, Asia Pacific Chief Economist, IHS Global Insight