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Singapore’s industrial production fell for the first time in three months in September as output at pharmaceutical companies dropped, heralding a moderation in the pace of the economic recovery.
Manufacturing, which accounts for about a quarter of Singapore’s economy, declined 7.7 percent from a year earlier following a revised 11.8 percent increase in August, the Economic Development Board said today.
“Output and export growth are likely to taper off in the months ahead and probably will not be as strong as they were in the early stage of the recovery,” said Irvin Seah, an economist at DBS Bank Ltd. in Singapore. “This is a natural phenomenon as we do not expect the economy to continue to power ahead at neck- breaking speed. The economy will likely shift toward a more sustainable pace of growth going forward.”
Gains in pharmaceuticals production and exports helped Singapore’s manufacturing industry expand for the first time in six quarters in the three months ended September, aiding the nation’s emergence from its recession. Drug plants are often shut down for routine maintenance before the next production cycle, creating swings in output patterns.
Industrial production is improving around the world as the global recession eases, prompting companies including chipmaker Intel Corp. to forecast better sales and profitability. Singapore’s export decline is easing, and the government has raised its 2009 economic forecast twice this year.
South Korea’s central bank said today the economy expanded at the fastest pace in seven years, leading a regional rebound with China and Singapore as companies including Hyundai Motor Co. and Samsung Electronics Co. reported surging profits, boosted by exports. Singapore’s recovery has also been boosted by higher output of pharmaceutical products.
Singapore’s industrial production fell a seasonally adjusted 9.1 percent in September from the previous month, when it slid a revised 6 percent.
Manufacturing climbed 6.6 percent in the third quarter, less than the 8.3 percent gain estimated by the government on Oct. 12, today’s report showed.
Eectronics production fell 1.1 percent from a year earlier last month, following a 6.4 percent decline in August. Electronics make up about 26 percent of total manufacturing output, and shipments of such products have dropped every month for more than two years.
Pharmaceutical production, which accounts for about 20 percent of manufacturing, dropped 15.2 percent after jumping a revised 107.8 percent in the previous month. Excluding biomedical manufacturing, production contracted 5.8 percent in September, less than the decline in August.
Singapore factory output falls 7.7 pct
Singapore said Monday that key industrial output during September fell 7.7 percent year on year as declines were posted across every sector.
The figure snapped two straight months of expansion and was worse than the average 1.1 percent fall tipped by a Dow Jones Newswires poll of analysts.
On a month-on-month seasonally adjusted basis, industrial output in September was down 9.1 percent from August, the Economic Development Board (EDB) said in its monthly report.
Singapore’s monthly industrial output data is one of the most widely monitored economic indicators as the manufacturing sector accounts for almost a quarter of economic activity.
The sector, like other parts of Asia, has been hit by the global slowdown as most of its output is either shipped as components to be assembled elsewhere or exported as final goods to key markets such as the United States.
The precision engineering industry, which includes machinery and systems, posted the sharpest decline of 14.3 percent year-on-year, following a 12.1 percent fall in August, the EDB said.
Biomedical output shrank 13.9 percent after expanding 97.7 percent the previous month. The biomedical sector is highly volatile because plants are routinely closed for maintenance while output targets can vary due to different products being made.
In the electronics industry, output eased 1.1 percent, chemicals dropped 8.7 percent and transport engineering fell 8.1 percent, the EDB said.
Total manufacturing output for the January-September period was down 6.9 percent from a year ago.
Despite the poor data, recent figures suggest Singapore’s economy was recovering from the slump with preliminary data released earlier this month showing 0.8 percent growth in the third quarter.
The government also upgraded its 2009 forecast to a contraction of 2.0-2.5 percent, smaller than the previous estimate of 4.0-6.0 percent shrinkage.