Singapore January industrial output likely to contract by 1.7 pct y/y, says DBS Group Research

Singapore’s industrial production for the month of January is expected to have contracted by 1.7 percent y/y, down from an expansion of 2.7 percent previously, according to the latest report from DBS Group Research.

Non-oil domestic export performance has slipped (-10.1 percent y/y, -5.7 percent m/m sa) as global demand continues to wane and growth in global semiconductor sales dipped into negative.

PMIs are also slipping across the board in key markets such as the US, China and Eurozone. These factors will likely be reflected in the industrial output. Moreover, global business cycle was already easing on the back of tighter liquidity conditions associated with monetary policy normalization.

Trade war has added more salt to wound. Optimism is now replaced by anxiety in the manufacturing sector.

"Though the industrial output series will be distorted by large seasonal effect arising from the Lunar New Year in Jan-Feb period, the longer trend is still down, not up. The key thing to watch out for is the pace of deceleration," the report added.