Singapore industrial production jumps unexpectedly in December, U.S. trade protectionism a headwind in future

Singapore industrial production jumped unexpectedly in December. This was another month of a good showing in the industrial production index but the outcome is way above expectation.

Headline industrial production output surged by a whopping 21.3 percent y/y. Excluding the biomedical cluster, output grew 16.1 percent. In sequential term, manufacturing output rose by 6.4 percent m/m (seasonally adjusted). Excluding biomedical, output grew 6.9 percent, reported DBS Bank in its research note.

It’s been a long while since manufacturing output put in get such a strong performance. Though a seasonal pullback can be expected in Jan-Feb due to the Lunar New Year, it does confirm our long-held belief that the manufacturing sector had bottomed in the third quarter of 2016 and medium growth trajectory is heading up, they added.

The DBS Bank in its research note mentioned that the key electronics cluster is enjoying a healthy run, with firmer consumption growth in the US. And while the biomedical cluster could still experience occasional shocks in term of routine plant shut-down for maintenance going forward, overall production capacity in a “normal month” has been robust. Moreover, the oil and gas sector is becoming less of a drag, given the recovery in oil prices and lapsing of base effect.

Indeed, greater United States trade protectionism could be a concern for the manufacturing sector in the longer term. But apart from that, the outlook for the sector, as highlighted in this space several times in the past, is certainly turning brighter. Spring has finally arrived for the manufacturing sector after having been stuck in the cold winter for the past two years.