Singapore: Industrial Production looks solid – UOB

Senior Economist at UOB Group Alvin Liew comments on the latest Inflation Production figures in Singapore.

Key Takeaways

“Singapore’s industrial production (IP) enjoyed another strong month in May as it rose by 10.9% m/m SA, 13.8% y/y (from the revised Apr readings of 2.1% m/m, 6.4% y/y) well exceeding Bloomberg survey estimates.”

“The main sources of IP growth were from electronics (of which semiconductor drove the upside with a 45.7% y/y spike), transport engineering, general manufacturing and precision engineering, more than offsetting the continued weakness in biomedical (of which pharmaceuticals production plunged -14.8% y/y) and chemicals (of which the main drag came from petrochemicals).”

“Accounting for the May’s increase, Singapore’s IP expanded a decent 8.7% in the first 5 months of 2022. We continue to be positive on the outlook for electronics, transport engineering, general manufacturing, and precision engineering, to drive overall IP growth but we are also cognizant about the external risks including (1) Russia-Ukraine conflict, (2) global supply disruptions, (3) monetary policy tightening stance in the advanced economies slowing growth and (4) resurgence of COVID19 infections and/or new variants. In addition, another dampener to headline growth is the relatively higher base levels for the rest of 2022, as IP expanded by double digit growth rates between May and Dec 2021 (except for Sep 2021). We now expect IP growth to increase by 4.5% in 2022 (up from previous forecast of 4%).”