Economy faces growing risk

Singapore's industrial production declined at a faster pace in July, highlighting the headwinds the manufacturing sector is facing from weak global demand.

Manufacturing output last month shrank 3.6 per cent year on year, after dipping 0.3 per cent in June, data from the Economic Development Board (EDB) showed yesterday.

Factory output was expected to edge up 0.9 per cent from a low base a year ago, according to economists polled by Reuters.

July's manufacturing report adds to recent dismal economic data that some economists say point to a risk of economic contraction ahead.

Figures last week showed Singapore's export slump deepening in July, with shipments tumbling 10.6 per cent, the most in four months, as sales to all but one of the country's top 10 markets fell.

Excluding biomedical manufacturing, factory output fell 2 per cent year on year, said EDB.

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That volatile cluster contracted 9.7 per cent in July from a year ago.

The manufacturing slump was broad-based, with the electronics cluster the only one to see growth in July.

Its output was up 16.2 per cent from a year ago, thanks to a 34 per cent jump in the semiconductor segment.

But this was partially offset by declines in the rest of the electronic segments.

The transport engineering cluster suffered the worst performance in July, with output shrinking 21.8 per cent from a year ago.

This was largely due to the marine and offshore engineering segment, where output tumbled 33.4 per cent because of the continued slump in demand for rig-building activities and oil field and gas field equipment.

The chemicals cluster saw a 3.2 per cent year on year fall in output, while the precision engineering and general manufacturing industries fell by 4.9 per cent and 10.2 per cent respectively.

On a seasonally adjusted month on month basis, manufacturing output dropped 4 per cent in July, worse than the 1.1 per cent expected by economists. Excluding biomedical manufacturing, it fell 4.8 per cent.

- The Straits Times