The Economic Development Board revealed the previous day that industrial output for the month of March dropped by one-third from the previous year.
The fall went beyond the Bloomberg poll estimates of a 24 percent drop. On a seasonally adjusted basis, there was a 13.9 percent drop in the industrial output from the month of February. Total output fell 26.1 percent for Q1 from the previous year.
Robert Prior-Wandesforde, HSBC economist, stated that figures bashed into export numbers the previous week. This implied that exports, particularly NODX or non-oil domestic exports, increased by 10 percent from the month of February. Majority of Singapore’s production is exported.
Mr. Prior-Wandesforde stated, “One possible implication of the output and export releases is that inventories were brought down significantly as companies met the strength of external demand by drawing down stocks”.
Data problems might be present “although there remains a nagging worry that the Singapore economy is continuing to underform its Asian neighbours”, the economist noted.
Numbers were in agreement with the previous month’s 19 percent seasonally adjusted month-on-month drop in intermediate goods’ non-oil retained imports, noted Kit Wei Zheng, Citi economist. The deficient industrial production results in spite of NODX’s strong recovery “suggests manufacturers remain cautious amid limited demand visibility”. “For now, export data is improving faster than production data . . . reinforcing the view that while export demand is stabilising, manufacturers do not yet have the confidence to ramp up production, but are instead meeting export demand by drawing down on inventory”, Mr. Kit added.
The Citi economist also mentioned that GDP figures in the first quarter might improve by -10.7 percent, from the 11.7 percent contraction that the government initially estimated due to the increase in production for the current quarter.
As expected, the electronics sector played a big role in the decline, according to the EDB. The sector had a 34.6 percent year-on-year drop in production, with about 40 percent drop in the first quarter. Output in the biomedical sector also dropped for about 30 percent in Q1.
Mr. Prior-Wandesforde said, “Pharmaceuticals are once again giving reason for concern”.
In year-on-year terms, a 10.5 percent drop was seen in the general manufacturing while transport engineering increased by one percent. Precision engineering had 29.6 percent drop and chemicals shrank by 22.7 percent.