Homepage
PR Newswire
27-11-2010, 06:55 AM
Nov 27, 2010
Factory output jumps 31%
October's pace fastest in five months, fuelled by huge jump in biomed sector
By Robin Chan
MANUFACTURING output shot up 31 per cent last month - the fastest pace in five months - trumping expert forecasts and stopping dead the possibility of a technical recession.
Economists had tipped growth of 26.8 per cent for the month over the same period last year, but a huge jump in pharmaceutical production overturned that forecast.
'Stronger manufacturing growth in October rules out a technical recession,' said Dr Chua Hak Bin, economist at Bank of America-Merrill Lynch.
Mr Ravi Menon, Permanent Secretary for the Ministry of Trade and Industry, said last week that Singapore had likely evaded a technical recession, or two consecutive quarters of negative growth from the preceding quarter.
The economy contracted in the third quarter from the second quarter, but looks likely to grow slightly in the last three months of the year, pulled up by manufacturing.
The Government expects the economy as a whole to grow 15 per cent this year.
But while manufacturing is on a roll, its momentum is slowing. Last month's output grew 2.2 per cent from September, well down on the 6.5 per cent expansion in September from August.
Much of this was due to the biomedical sector, which surged 107.3 per cent last month from a year ago, thanks to a 121.4 per cent rise in pharmaceuticals.
Taking away the biomedical sector's output contribution, overall factory output declined 1.9 per cent from September, the second straight monthly fall. Its year-on-year growth was also slower at 14.2 per cent.
Electronics output slowed to 12.9 per cent growth last month from a year ago, after expanding 28 per cent in September.
The other industrial sectors were still growing: Precision engineering expanded 38.8 per cent while transport engineering was up 6.8 per cent.
Overall, the manufacturing economy has expanded 31.1 per cent for the first 10 months of the year compared with the same period last year.
Barclays Capital economist Leong Wai Ho said electronics will lead the slowdown in growth momentum.
'Industry bellwethers, such as Samsung, Foxconn and Intel, have noted weaker-than-expected demand for PCs and TVs in mature markets in August and warned of a glut of memory chips in 2011,' he said.
However, Citigroup economist Kit Wei Zheng said the biomedical sector rebound may last through to February.
He said this should lift economic growth by 8 per cent to 10 per cent in the fourth quarter from the third, suggesting a year-on-year growth rate of 13 per cent to 13.5 per cent. This would also put the economy on target for 15 per cent full-year growth.
Economists expect manufacturing growth to slow in the year ahead while services will pick up some of the slack. That sector is tipped to contribute the bulk of the expected 4 per cent to 6 per cent growth next year.
'Manufacturing may face more difficult conditions, given escalating wage costs and competitive pressures from a stronger Singapore dollar,' said Dr Chua.
'Services will likely be a key growth driver in 2011, with tourism and financial services as the leading sectors.'
Indeed, the services sector continued to post steady growth in the third quarter, according to figures released yesterday by the Singapore Department of Statistics (DOS).
Firms in services industries collected 9 per cent more in business receipts in the third quarter compared with the same quarter last year. This was a slight increase from the corresponding rise of 8.6 per cent in the second quarter.
Between the second and third quarters of this year, business receipts rose by 1.9 per cent, said the DOS. All segments performed better in the third quarter than in the second quarter.
But two were particularly outstanding: real estate services, which saw a 12.6 per cent jump in business receipts on the back of a strong property market; and a category called 'other services activities', which economists believe include receipts from the integrated resorts. Business receipts in this category soared 43.6 per cent quarter-on-quarter.
Factory output jumps 31%
October's pace fastest in five months, fuelled by huge jump in biomed sector
By Robin Chan
MANUFACTURING output shot up 31 per cent last month - the fastest pace in five months - trumping expert forecasts and stopping dead the possibility of a technical recession.
Economists had tipped growth of 26.8 per cent for the month over the same period last year, but a huge jump in pharmaceutical production overturned that forecast.
'Stronger manufacturing growth in October rules out a technical recession,' said Dr Chua Hak Bin, economist at Bank of America-Merrill Lynch.
Mr Ravi Menon, Permanent Secretary for the Ministry of Trade and Industry, said last week that Singapore had likely evaded a technical recession, or two consecutive quarters of negative growth from the preceding quarter.
The economy contracted in the third quarter from the second quarter, but looks likely to grow slightly in the last three months of the year, pulled up by manufacturing.
The Government expects the economy as a whole to grow 15 per cent this year.
But while manufacturing is on a roll, its momentum is slowing. Last month's output grew 2.2 per cent from September, well down on the 6.5 per cent expansion in September from August.
Much of this was due to the biomedical sector, which surged 107.3 per cent last month from a year ago, thanks to a 121.4 per cent rise in pharmaceuticals.
Taking away the biomedical sector's output contribution, overall factory output declined 1.9 per cent from September, the second straight monthly fall. Its year-on-year growth was also slower at 14.2 per cent.
Electronics output slowed to 12.9 per cent growth last month from a year ago, after expanding 28 per cent in September.
The other industrial sectors were still growing: Precision engineering expanded 38.8 per cent while transport engineering was up 6.8 per cent.
Overall, the manufacturing economy has expanded 31.1 per cent for the first 10 months of the year compared with the same period last year.
Barclays Capital economist Leong Wai Ho said electronics will lead the slowdown in growth momentum.
'Industry bellwethers, such as Samsung, Foxconn and Intel, have noted weaker-than-expected demand for PCs and TVs in mature markets in August and warned of a glut of memory chips in 2011,' he said.
However, Citigroup economist Kit Wei Zheng said the biomedical sector rebound may last through to February.
He said this should lift economic growth by 8 per cent to 10 per cent in the fourth quarter from the third, suggesting a year-on-year growth rate of 13 per cent to 13.5 per cent. This would also put the economy on target for 15 per cent full-year growth.
Economists expect manufacturing growth to slow in the year ahead while services will pick up some of the slack. That sector is tipped to contribute the bulk of the expected 4 per cent to 6 per cent growth next year.
'Manufacturing may face more difficult conditions, given escalating wage costs and competitive pressures from a stronger Singapore dollar,' said Dr Chua.
'Services will likely be a key growth driver in 2011, with tourism and financial services as the leading sectors.'
Indeed, the services sector continued to post steady growth in the third quarter, according to figures released yesterday by the Singapore Department of Statistics (DOS).
Firms in services industries collected 9 per cent more in business receipts in the third quarter compared with the same quarter last year. This was a slight increase from the corresponding rise of 8.6 per cent in the second quarter.
Between the second and third quarters of this year, business receipts rose by 1.9 per cent, said the DOS. All segments performed better in the third quarter than in the second quarter.
But two were particularly outstanding: real estate services, which saw a 12.6 per cent jump in business receipts on the back of a strong property market; and a category called 'other services activities', which economists believe include receipts from the integrated resorts. Business receipts in this category soared 43.6 per cent quarter-on-quarter.
My Value Investing Blog: http://sgmusicwhiz.blogspot.com/