Manufacturing output up 14.6% in October

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All but two clusters expanded, with electronics rising 45.1% year-on-year

Factory production delivered another impressive showing last month with electronics continuing to power ahead, but the pace will likely ease up a touch, said economists.

They warn that slowing semiconductor demand will be one of the factors that will be putting the brakes on in this quarter and into the new year.

Overall manufacturing output grew 14.6 per cent last month from the same month last year, the Economic Development Board said yesterday.

This is slightly higher than September's industrial output of 14.4 per cent, revised from an earlier estimate of 14.6 per cent.

Last month's official number missed economist estimates of 16 per cent due mainly to a drag in the traditionally volatile biomedical sector. If the sector was excluded, growth would have been 25.8 per cent.

Manufacturing, which makes up one-fifth of the economy, has been a key growth driver this year. All clusters expanded last month except biomedical, which fell 24.2 per cent, and transport engineering, down 3.8 per cent.

But electronics more than made up for this shortfall, surging ahead with a stellar 45.1 per cent growth year-on-year.

This was led by semiconductors, which posted gains of 64.6 per cent - its 20th consecutive month of double-digit expansion. Precision engineering - a beneficiary of the rise in global electronics demand - grew 23.6 per cent.

Yesterday's data comes a day after the Ministry of Trade and Industry upgraded its forecast for this year's economic growth to 3 per cent to 3.5 per cent, up from 2 per cent to 3 per cent previously.


But economists are not overly optimistic about the continued momentum for semiconductors.

UOB economist Ho Woei Chen noted that the growth in semiconductors this year has been mostly cyclical. He expects this demand to slow next year.

He added: "That slowdown may also mean headwinds to other surrounding services, such as precision engineering."

Growth is also expected to moderate towards the tail end of this year, due to high base effects kicking in.

Economists also believe that China's growth next year could moderate due to a slowdown in investment.

But most industry watchers are not too worried.

Services, which constitutes two-thirds of the economy, is expected to do some of the heavy lifting.

"This year, growth has been very narrowly based in electronics. For next year, we believe the drivers of growth would broaden to other domestic-oriented sectors," noted Credit Suisse economist Michael Wan.