SINGAPORE – Singapore’s manufacturing output rose less than expected in September, as output in the key electronics sector fell for the third month in a row.
Total output last month rose 0.9% year-on-year, according to data released Wednesday by the Economic Development Board (EDB). Excluding biomedical manufacturing, production increased by 2%.
However, overall output fell short of the 1.2% growth that analysts had predicted in a Bloomberg poll, although it was better than August’s anemic 0.5% rise, thanks to the transportation engineering and general manufacturing.
The electronics sector saw output fall 7% last month, after falling 7.8% in August and 5.2% in July. The industry, which is key to Singapore’s economic growth as it accounts for 40% of export-oriented manufacturing, is facing declining global demand.
Singapore’s semiconductor production, which accounts for 80% of electronics manufacturing, fell 8.4% in September, after falling in July and August. Singapore supplies 11% of the world’s semiconductors and 20% of chip manufacturing equipment.
Production of other electronic modules and components fell 29.1%, while computer peripherals and data storage fell 15.2%. The infocoms and consumer electronics segment, however, grew by 21.8%.
OCBC bank chief economist Selena Ling noted that big chipmakers like Texas Instruments and SK Hynix were the latest to issue a warning to the semiconductor market, with demand for chips weakening. personal appliances and industrial equipment. Hynix said Wednesday that memory prices fell 20% in the last quarter and warned of an “unprecedented deterioration in market conditions.”
Ms. Ling said, “Recent moves by the US administration to curb chip exports to China are also weighing on the outlook for the global chip industry. This despite the approach of the end of the year when the peak of Christmas orders should be beneficial for the order pipeline.
Mr. Alvin Liew, senior economist at UOB, said the trend of slowing semiconductor sales growth in Asia-Pacific turned negative in August (-2.9%) for the first time since January. 2020, and is expected to turn more negative in the following months, adding further evidence to the easing outlook for electronics.
Production of chemicals also fell last month, falling 7.1%. The oil segment grew 12.1% on higher demand for jet fuel as global restrictions on air travel eased. But the specialty segment fell 2.3%, while the other chemicals segment recorded a decline of 12.7%. The petrochemicals segment also saw its production fall by 14.7%, due to shutdowns for plant maintenance.
The transportation engineering industry grew 38% in September. Marine and offshore engineering rose 64.5%, supported by higher activity levels at shipyards as well as increased production of oil and gas field equipment. The aerospace segment grew 36.4% with increased demand for aircraft parts and more maintenance, repair and overhaul jobs due to increased global air traffic.
General manufacturing output rose 23.3% year-on-year in September, with all segments seeing an increase in output.
Manufacturing output rose 3.9% in the first nine months of this year, but was expected to fall below the 3% mark for the full year amid growing economic headwinds, Ms. Ling. Financial conditions are tightening as central banks tighten and elevated inflationary pressures are eating away at consumers’ pockets, she said.
“As such, Singapore’s economy will need the service sector to do the heavy lifting from here,” Ms Ling said.