SINGAPORE (Nov 26): Singapore’s industrial production came in stronger than expected in October, increasing 4.0% year-on-year on the back of a 24.0% jump in biomedical manufacturing output.

Excluding biomedical manufacturing, output grew 0.2% in October, according to data released Nov 26 by the Singapore Economic Development Board (EDB), a government agency under the Ministry of Trade and Industry (MTI).

Economists had predicted a 1.4% fall in October manufacturing output, according to consensus estimates.

On a seasonally adjusted month-on-month basis, manufacturing output increased 3.4%. Excluding biomedical manufacturing, output grew 6.5%.

The biomedical manufacturing growth was driven by the pharmaceutical segment, which rose 29.6% y-o-y with higher production of active pharmaceutical ingredients.

This was supported by the medical technology segment, which rose 13.1% y-o-y on the back of higher export demand for medical devices.

“The profile of electronics output in Singapore has tended to exhibit a saw-tooth-like profile, especially since mid-2018, effectively reverting to a trend that appears to be headed lower, and it appears that both October and September were strong months following the contraction in August,” says analyst Ong Sin Beng at JPMorgan Chase.

“Thus, the signal from electronics – especially in semiconductors – looks to be more dominated by idiosyncratic rather than global factors,” he adds.

General manufacturing output increased 7.3% y-o-y in October, led by a 14.2% growth in the food, beverages & tobacco segment, while precision engineering output grew 3.4% y-o-y on higher production of metal precision components and optical products.

Electronics output registered a marginal 0.4% y-o-y growth, as improvements in the infocomms & consumer electronics, data storage and computer peripherals segments were dragged by contraction in output across the rest of the electronics segments.

Meanwhile, the transport engineering and chemicals clusters recorded contractions in output in October.

Transport engineering output was 2.4% lower y-o-y, despite a 21.0% growth from the aerospace segment on more repair and maintenance jobs from commercial airlines. Overall growth in the cluster was torpedoed by a 4.8% decline in the land engineering segment and a 22.8% drop in the marine & offshore engineering segment.

Chemicals output fell 9.6% y-o-y, as output in the specialties and petrochemicals segments was weighed down by maintenance shutdowns.

“Output stabilisation has taken hold and the view remains one of a shallow lift following the stabilisation,” says JPMorgan’s Ong. “Given the turn in October output, we maintain our forecast of 1.0% q-o-q seasonally adjusted annual rate (SAAR) growth in 4Q19.”

“We await the November PMIs (Purchasing Managers’ Indexes) next week before making growth revisions,” he adds.