Singapore's factory output grew 5.9% in March

This was bolstered by semiconductors, which has been growing at a double-digit rate for 25 months.

Singapore’s industrial production (IP) grew 5.9% YoY in March 2018. Excluding biomedical manufacturing, output grew 8.6% YoY.

The electronics cluster continued on an expansionary path for the 25th consecutive month and gained 12.4% YoY in March, mainly supported by the continued growth in the semiconductors (+18.8% YoY), which has been growing at a double-digit pace for the past 25 consecutive months.

However, output in infocomms & consumer electronics (-7.7% YoY), other electronic modules & components (-0.5% YoY), and data storage (-19.0% YoY) contracted.

Growth in the biomedical manufacturing cluster fell for the second month as it contracted 5.4% YoY in March. UOB economist Francis Tan commented, “The volatility in this cluster is exemplified by February’s initial growth rate of 8.4% YoY (first reported on 26 March 2018) being markedly revised to a contraction of 7.1% YoY in today’s release. This was probably the main reason for the downwardly revised February IP.”

Output in the chemicals cluster gained 8.2% YoY in March, as growth was led by the petrochemicals (+20.4% YoY) segment. Tan noted that there had been worries that the recent announcement by China’s Commerce Ministry (MOFCOM) that it will consider temporary anti-dumping measures on “synthetic rubber” imports from Singapore (together with US and the EU) on 19 April 2018 may negatively impact Singapore’s chemical industry.

“However, the US$879m of synthetic rubber exports in 2016 represented only 0.32% of Singapore’s total non-oil exports, while we maintain our base case scenario of no all-out trade war,” he said.

Meanwhile, the transport engineering cluster continued its third month of expansion by growing 3.5% YoY in March, mainly led by the aerospace segment (+13.1% YoY) and land transport (+8.2% YoY) segments. However, the marine and offshore engineering segment (-6.5% YoY) remained weak and contracted for the 37th consecutive month.

Output in the precision engineering cluster registered growth for the 20th consecutive month as it gained 10.5% YoY in March. Robust growth from the precision modules & components segment (+31.1% YoY) helped to boost this cluster.

Output in the general manufacturing industries cluster dipped 0.6% YoY in March due to lower production across all segments.

In the first quarter of 2018, Singapore’s manufacturing activities gained 9.8% YoY, higher than the 5.8% YoY in 4Q17.

Tan noted that this reflected the continued resilience in the manufacturing sector. “However, we are of the view that the high base from 2017 will result in a slower pace of expansion across the various manufacturing clusters over the next three quarters. This could be especially true for the electronics cluster… The slower pace of expansion in the Asia Pacific semiconductor sales may point to a similar growth path for Singapore’s electronics production,” he concluded.