Industrial production may have improved to 12.2% in February 2011

This is a slight increase from 10.5% yoy in January 2011 since the upside is limited given ongoing weakness in demand.

According to DBS, apart from the festive season effect, which typically see slower production activities, recent weakness in export performance also reflects the lacklustre demand.

The non-oil domestic export growth for February was up by a modest 2.9% mom sa and 7.8% yoy, not enough to render a sharp rise in output. Continued growth moderation in electronics can be expected but much lies in the performance of the volatile pharmaceutical industry, which could swing things sharply either way.

Nevertheless, DBS expect a stronger recovery in the US as well as a buoyant regional demand to bring about a more robust manufacturing performance in the second half of the year.