Singapore’s manufacturing sector performs better than expected on strong pharmaceuticals

Singapore’s headline industrial production data indicated that the overall manufacturing fell only 0.5% y/y in March, better than consensus forecast of a drop of 2%. However, excluding biomedical cluster, production shrank 5.5%. Overall, manufacturing output grew 1% on month-on-month basis, but after excluding biomedical output, it decreased 1%.

This indicates that pharmaceutical production mainly drove the overall output. It expanded 27.9% y/y in March. This pushed up the broader biomedical cluster output to 23.1%. Apart from pharma, electronics output also grew. It expanded 5.8%.

March’s industrial output figures have changed the Q1 growth outlook slightly, according to DBS Bank. Industrial production figures have been majorly revised upwards in the past two months. Along with the revision, the overall manufacturing growth averaged -1.1% y/y in the quarter, nearly one percentage point more than the earlier projected -2%, said DBS Bank.

But the main problem is that the pharmaceutical sector contributes quite less to the economy. The performance of the sector does not have much of an effect on the remainder of the economy, noted DBS Bank. It makes an impact only on the headline GDP figure.

Excluding pharmaceutical impacts and assuming no revisions to other sectors’ figures, the overall economic growth is likely to come in at 1.2% y/y in Q1 2016, noted DBS Bank.

Wednesday, April 27, 2016


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