Factory output beats forecasts, soars 19.1%

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Demand for locally produced electronics bolsters manufacturing sector

Manufacturing turned in "another stunning performance", as one economist called it, thanks to surging global demand for locally produced electronics.

Electronics, by far the brightest spot in the local economy, kept shining last month to send overall output surging.

Manufacturing production rose 19.1 per cent last month compared with the same month last year - beating economists' forecasts of a 16 per cent increase. This followed a 21 per cent surge in July.

The better-than-expected numbers could help lift overall economic growth in this quarter, economists said.

DBS senior economist Irvin Seah said the manufacturing sector "delivered another stunning performance as expected".

Manufacturing, which makes up a fifth of the economy, is being lifted by strong global demand for semiconductors and related equipment.

Almost all segments expanded last month.

Electronics was once again the top performer, with output soaring 38.7 per cent last month from a year earlier, according to Economic Development Board data out yesterday.

Output of the precision engineering cluster - another beneficiary of the rise in global electronics demand - grew 10.7 per cent last month, compared with the same month a year earlier.

Output in the traditionally volatile biomedical manufacturing cluster grew 25.1 per cent, with both the medical technology and pharmaceuticals segments posting robust growth.

Leaving aside biomedical manufacturing, overall factory output would have grown 17.8 per cent year on year.

Transport engineering's output increased 5.5 per cent, though the marine and offshore engineering segment remained weak, declining 15.8 per cent.


The chemicals cluster also grew, while output from general manufacturing dipped 0.6 per cent.

Electronics manufacturers will remain in the driving seat, said Mr Seah.

"Importantly, the robust expansion in electronics comes amid improvement in the global economic environment.

"Growth in China has been resilient despite earlier concern of slower growth. And economic momentum in the United States and the euro zone has also been picking up," he said.

This should translate into healthy manufacturing and export numbers for Singapore and in turn fuel strong economic expansion in this quarter, economists said.

Maybank Kim Eng economists Chua Hak Bin and Lee Ju Ye have pencilled in 3.8 per cent growth for the July to September quarter, up sharply from 2.9 per cent in the preceding three months.

Mr Johnny Mok, general manager of electronic manufacturing services provider Add-Plus, said business surged at the start of this year but has since slowed.

Lead times for some components have also increased, in part because manufacturers have become more cautious about increasing capacity, he added.