By REUTERS
Singapore’s industrial production in November fell more than expected from a year earlier, an outcome that may weigh on the city-state’s fourth-quarter (4Q) economic growth and points to a soft outlook for 2016.
Manufacturing output shrank 5.5% in November from a year earlier, data from the Economic Development Board (EDB) showed, weaker than the median market forecast for a 2.7% drop.
On a monthly basis output contracted 3.6%. The median forecast was for an expansion of 0.8%.
November was the 10th straight month of annual contraction in manufacturing output, which in January-November fell 4.6% from a year earlier.
“Today’s release reaffirms our view that the headwinds of persistently weak external demand and a slow inventory adjustment are likely to keep growth momentum subdued into 2016,” Rahul Bajoria, an economist for Barclays Bank, said in a note.
Weiwen Ng, an economist for ANZ, said weak global demand for the city-state’s goods, which include pharmaceuticals and electronics, is likely to weigh on externally-oriented sectors in the 4Q.
Meanwhile, the services sector is unlikely to have the type of support seen in the 3Q, when it was boosted by celebrations for the 50th anniversary of Singapore’s independence.
“It’s broadly in line with our view that 4Q will be challenging,” Ng said.
He expects economic growth to have slowed to 1.1% year-on-year in the 4Q, and that full-year growth for 2015 would probably come in at around 1.9%.
In the third-quarter, gross domestic product expanded 1.9% y-o-y.
Singapore’s advance estimate of 4Q gross domestic product is expected to be released in January.
Sluggish global demand has weighed on Singapore’s manufacturing sector, which accounts for about one-fifth of the city-state’s economy.
Electronics output fell 11.1% in November from a year earlier, while pharmaceuticals production shrank 9.0 percent.
Lower oil prices have also dented industrial production, by dampening demand for offshore drilling rigs.
Output in the marine and offshore engineering segment slid 20.1% in November from a year earlier, as rig-building activity fell and demand for oilfield and gas field equipment weakened, EDB said.
The manufacturing sector has been a drag on Singapore’s growth in 2015.
In each of the first three quarters, manufacturing has contracted from a year earlier, by an average 4.5%. The services sector has fared better, averaging 3.8% growth.
In late November, Singapore softened its growth outlook for 2015 amid sluggish global demand, even as data showed that its economy grew much faster than initially estimated in the third quarter, thanks to the services industry.
The government’s current GDP growth forecast for 2015 is “close to 2%”. That would be the lowest since 2009, when Singapore’s economy was hit by the global financial crisis and contracted 0.6%
— By Masayuki Kitano
You must be logged in to post a comment.