Singapore: Manufacturing Growth Softens In March

Yet at 7.6% year-on-year, industrial production growth is still better than the market expected and points to an upward revision in 1Q21 GDP growth, to 0.9% YoY from the initial estimate of 0.2%.

Source: Shutterstock

Base effect masks underlying IP strength

Singapore's industrial production (IP) growth softened to 7.6% year-on-year in March from 16.5% in February. Although substantially below our 14% YoY growth forecast, this is still a better outcome than the market expectations, which centred on close to a 5% YoY rise. The high base effect explains some slowdown in the year-on-year growth rate. Even so, it stands in stark contrast to the acceleration of non-oil domestic export growth in March (12.1% YoY vs. 4.2% in February) where the base effect was similarly pronounced.  

A seasonally-adjusted -1.7% month-on-month IP contraction in the last month was also at odds with both our and the consensus view of a fifth straight month of sequential growth. This may be attributed to a wonky seasonal factor. A 23% MoM jump on an unadjusted basis is consistent with the historical pattern of the Lunar New Year-related production slack in January-February being clawed back in March.

Electronics remains a key driver

Retaining its recent status as a star performing sector, electronics output staged a 33.7% YoY (15.7% MoM NSA) bounce in March. And, reflecting a disproportionate benefit from the global chip shortage, semiconductors continued to be the key driver here with a 38% YoY (12.4% MoM) output surge. Petrochemicals also stood out with a 21.7% YoY rise (17.1% MoM).  

Pharmaceuticals appeared to be a weak spot in terms of year-on-year growth, which swung to a -9.6% YoY contraction from 17.2% in February. But again, this was mainly the base effect masking underlying strength, evident from the more than 90% MoM jump in pharma output in the last month. The same was true in the transport sector, which posted a -20.6% YoY fall but gained 15.2% MoM.

1 2
View single page >> |

Disclaimer: This publication has been prepared by the Economic and Financial Analysis Division of ING Bank N.V. (“ING”) solely for information purposes without regard to any ...

more
How did you like this article? Let us know so we can better customize your reading experience.

Comments

Leave a comment to automatically be entered into our contest to win a free Echo Show.