Manufacturing output slows to 16.3% in July
This is the second month in the row when manufacturing grew at a slower pace.
Singapore’s manufacturing output increased by 16.3% in July, marking the ninth straight month of increases.
However, this was also the second month in a row when manufacturing output slowed down, contracting by 2.6% month-on-month.
“The pullback from June’s strong reading of 28.0% year-on-year (YoY) (-2.6% month-on-month) could be attributed to the slowing momentum in electronics (+1.5% YoY) due to its high base last year. In particular, the semiconductor segment saw a small decline of 0.4% YoY, which is likely partially attributable to a global supply crunch, albeit the other electronics segments still saw positive YoY growth,” said Selena Ling, head of research and strategy for OCBC Bank.
Biomedical manufacturing posted the highest increase in output, by 86.6% YoY, driven by a 134.9% increase in pharmaceuticals output.
This was followed by transport engineering, with a 33.1% increase in output, partially due to a low base last year.
Precision engineering, general manufacturing, and electronics output increased by 20.3%, 11.0%, and 1.5%, respectively.
Meanwhile, chemicals output contracted by 5.6% YoY due to weaker export demand from the petroleum segment.
OCBC expects the full-year manufacturing output to hit their forecast of a 10.3% growth, even if favourable base effects fade.
“As vaccination ramps up and COVID restriction measures are gradually relaxed in key manufacturing and electronics centres in Asia, coupled with global chip manufacturers also ramping up capacity (as reflected in the semiconductor equipment demand), the chip supply situation may resolve over time, even if short-term hiccups continue for now,” Ling said.