Signs of a broader recovery in manufacturing could emerge in mid-2024: expert

An expert said manufacturing activity has likely bottomed following the 7.4% YoY jump in output in October.

Experts expect Singapore’s manufacturing momentum to strengthen in 1Q24 and see signs of a broader recovery in manufacturing by mid-2024.

According to UOB Senior Economist Alvin Liew, central banks in major Advanced Economies (AE) may begin to cut policy rates as inflation in their respective
economies moderate and inch closer to the 2% objective towards mid-2024.

“In particular, we expect the Federal Reserve to begin its rate cut cycle in mid-2024, with a cumulative 75bps of rate cuts pencilled in our 2024 forecast. In China, further policy support, including via interest rate cuts, may portend some uplift in external prospects,” Liew said.

Gan said the consequent easing of financial conditions supporting consumption and investment activity will imply a gradual recovery in external demand. 

RHB’s Acting Group Chief Economist, Barnabas Gan, for his part, said improving global trade winds and gradual recovery in China-centric numbers will improve the manufacturing performance of Singapore in 1Q24.

“Our view for Singapore’s manufacturing momentum to strengthen into 4Q23 has materialised very nicely, with its sequential growth surging 9.8% MoM seasonally adjusted (SA) in October 2023, against an upward revision of September’s growth to +13.1% MoM SA,” Gan said.

“We expect manufacturing momentum to improve in the next two quarters on the back of stronger global trade and manufacturing trends already seen year-to-date,” Gan added.