Industrial output in June easily beat forecasts, with a resurgent electronics sector leading the charge.
Growth shot up 13.1 per cent over the same month last year – the biggest year-on-year rise this year and 11th consecutive month of increase.
Last month’s performance exceeded forecasts of around 8.5 per cent and tripled the revised 4.4 per cent growth in May.
Most economists expect second- quarter gross domestic product growth to be upgraded, but are divided on manufacturing’s prospects. Some believe the recovery is broad-based and may point to the economy’s expansion in this half of the year, while others warned that growth among various sectors remains uneven.
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Electronics jumped 25.5 per cent in June over the same month last year, with semiconductors surging by 37.4 per cent. Precision engineering grew 5.3 per cent year on year last month. OCBC economist Selena Ling and UOB economist Francis Tan both see continued momentum in electronics, but at a slower pace. Mr Tan said semiconductor growth could slow in this half if capital expenditure growth in China slows.
The biomedical sector rebounded after five months of contraction with 18.3 per cent growth last month compared with a year earlier, led by gains in pharmaceuticals and medical technology. DBS senior economist Irvin Seah said this sector was due for a rebound “after two months of shutdown in some of the key plants for routine maintenance”.
Chemicals also grew faster, boosted by petrochemicals, while general manufacturing remained the weakest sector. Transport engineering finally broke a 36-month period of contraction, growing 4.6 per cent year on year last month, as aerospace and land transport segments expanded. But marine and offshore engineering remained weak, falling 11.8 per cent.
Association of Small and Medium Enterprises president Kurt Wee warned that the recovery is not broad-based as several sectors – oil and gas, construction as well as retail – remain in the doldrums.
While SMEs are a little more optimistic about the second half, it is too early to break out the bubbly.
Singapore Business Federation chief executive Ho Meng Kit said: “Retailers aren’t moving fast enough into new ways of retailing through e-commerce, or sharing platforms like Alibaba’s. “