Singapore December factory output decline moderates to 0.7%

Singapore

SINGAPORE'S factory output fell 0.7 per cent year-on-year in December, moderating from November's revised figure of an 8.9 per cent fall, according to preliminary figures from the Singapore Economic Development Board on Friday.

Coming amid expectations of a bottoming-out in manufacturing in 2020, December's figure was marginally below private-sector economists' estimates of a 0.6 per cent fall.

Excluding the volatile biomedical manufacturing cluster, the fall would have been greater at 3.2 per cent.

On a seasonally-adjusted monthly basis, manufacturing output rose 4.1 per cent in December - the fastest month-on-month pace in five months, "suggesting that signs of stabilisation are still being seen", said UOB economist Barnabas Gan.

"Barring unforeseen escalation of global trade tensions in the year ahead, we remain cautiously optimistic that manufacturing could expand by 0.5 per cent in 2020," he said.

Month-on-month growth was 1.1 per cent excluding biomedical manufacturing.

With the latest figure, Singapore's industrial production was down 1.4 per cent for all of 2019, with biomedical manufacturing and general manufacturing being the only clusters with full-year output growth.

Biomedical manufacturing was the top performer in December with output growth of 10.3 per cent, led by the medical technology segment's 20 per cent growth on the back of higher export demand for medical devices, and 6.9 per cent growth in pharmaceutical output.

For the full year, biomedical manufacturing output grew 10.7 per cent.

After a largely lacklustre 2019, precision engineering rallied with output up 7 per cent in December led by 19.1 per cent growth in precision modules and components. But for the full year, the cluster's output was still down 2.5 per cent compared to 2018. Electronics output rose a modest 0.2 per cent in December, recovering from November's shock 22.2 per cent fall, and led by a 42.6 per cent rise in data storage.

The weighty semiconductors segment saw 1 per cent growth, recovering from November's 25.6 per cent plunge.

For 2019, the electronics cluster was the worst performer with output down 7.4 per cent amid the global downcycle but economists expect the worst to be over.

Barclays economist Brian Tan said December's figure provides "firmer signs of electronics bottoming out", even though output "remains weak and well behind the recovery in exports of electronics".

Chemicals output fell 5.2 per cent in December, with declines in all segments. Specialty chemicals and petrochemicals output fell the most, weighed down by maintenance shutdowns. Full-year output was down 2 per cent.

General manufacturing fell 10 per cent in December, dragged down by a 20.2 per cent fall in the food, beverages and tobacco segment with lower production of milk powder and beverage products. Nonetheless, the cluster managed full-year output growth of 1.5 per cent.

Transport engineering output fell 14.1 per cent, with increases in land and aerospace respectively being more than offset by a 31.2 per cent decline in marine and offshore engineering. Full-year output for the cluster was down 1.8 per cent.

With the December figures, industrial production for the fourth quarter was down 2.3 per cent year-on-year, steeper with the assumed 2.1 per cent fall in the Q4 advance estimate of gross domestic product growth, noted Mr Tan.

Taking into account data on construction and services, he estimates Q4 growth at 0.7 per cent year-on-year, slightly below the 0.8 per cent advance estimate.