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Singapore industrial production surprise markets, biomed take the lead

Singapore April industrial production surprised markets on the upside, with the biomedical sector being the torchbearer for the jump. Without biomed taking the lead, manufacturing output would have witnessed a decline.

The headline industrial production figure expanded by 2.9 pct y/y, with biomedical sector contributing for 14.9 pct m/m. Barring biomed, the figure would have contracted by a modest 0.1 pct on year. On a sequential m/m basis, overall manufacturing output grew by 4.8 pct. And if biomed is excluded, output would have expanded by an even stronger 5.1 pct m/m.

The manufacturing sector is struggling the odds of weak demand and slump in global crude oil prices. Apart from the electronics and biomedical clusters, all the other industries are still contracting.

Meanwhile, the electronics sector, a matter of concern for the Singaporean economy, can be the turning point for output growth in the industrial sector. Output growth in electronics manufacturing was up by a healthy 10.9 pct y/y, from 5.8 pct previously.

"If such positive growth trend persists, we could be seeing light at the end of the tunnel for this cluster," DBS said in a research note.

Further, improvements in manufacturing output can be observed in the near term, if growth in the electronics sector continues to remain positive amid potential pullback in the biomed sector, which is more likely to occur given the sector’s volatile nature. However, a lot depends on the sustainability of these factors.

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