Senior Economist Alvin Liew at UOB Group reviews the latest industrial production results in Singapore.

Key Takeaways

“Singapore’s industrial production (IP) rebounded with a 9.3% m/m SA expansion in Mar, from a downwardly revised -12.5% m/m decline in Feb. This translated to a markedly smaller decline of -4.2% y/y in Mar, from the -9.7% y/y contraction in Feb. Both measures were better than Bloomberg’s median forecast of +6.2% m/m, -6.1% y/y and much better than our forecasts of -12.6% m/m SA, -24.8% y/y. Despite the improvement, this was still the sixth consecutive month of y/y decline and the worst streak since 2015 (11 months of y/y declines). Excluding the volatile biomedical manufacturing, IP contracted by a larger -6.0% y/y in Mar (from -5.8% y/y in Feb).”

“Based on advance estimates released by Ministry of Trade and Industry on 14 Apr, Singapore’s economy grew by just 0.1% y/y in 1Q 2023 (from 2.1% in 4Q 2022) with growth being dragged down by the manufacturing sector (which contracted by -6.0% y/y) while services (+1.8% y/y) and construction activity (8.5% y/y) supported GDP. However, based on the Mar IP report, the manufacturing sector is likely to have contracted by a smaller -5.6% y/y in 1Q. Assuming no major changes to the other sectors, we now expect 1Q GDP growth to be revised slightly higher by 0.1 ppt to 0.2% y/y, taking into account the milder manufacturing contraction.”

“IP Outlook – Notwithstanding the uplift brought by the biomedical technology and transport engineering components, the latest Mar IP print continues to affirm our downbeat manufacturing outlook due to the worsening electronics downcycle and weaker external demand. We maintain our forecast for Singapore 2023 manufacturing to contract by 5.4%.”