S’pore August factory output falls most in 4 years

SINGAPORE:

Factory output in Singapore plunged last month by the most in almost four years, a sign that the city-state’s manufacturing downturn could be deepening.

Industrial production dropped eight per cent from a year earlier, the weakest since December 2015 and worse than all the forecasts in a Bloomberg survey of economists.

It shrank 7.5 per cent on a seasonally adjusted monthly basis, the Economic Development Board said in a statement yesterday.

Electronics was the biggest culprit for the downturn, plunging 24.4 per cent last month from a year ago, the worst reading for that industry since the start of 2012.

The surprisingly intense weakening is a fresh blow for growth prospects in trade-reliant Singapore after last month’s data had given economists hope that the pain could be easing.

The United States-China and Japan-South Korea trade tensions, as well as a broader slowdown in China and elsewhere, continue to weigh on Singapore, where the government has slashed its full-year growth forecast to near zero.

“Given that the US-China trade war remains at a stalemate between hope and gloom — partly depending on Trump’s tweets — even the prospect of a mini trade deal pending the trade talks early next month may not suffice to lift the domestic manufacturing sector for now,” said Singaporebased head of treasury research and strategy at Oversea-Chinese Banking Corp Selena Ling, in a research note.

The data may give the Monetary Authority of Singapore (MAS) reason to ease policy at its meeting next month. The MAS, which uses the exchange rate as its main tool, left its policy settings unchanged in April.

Singapore officials have said that while the slump heading into the second half of the year has been stark, it is not yet deep or sustained enough to warrant fiscal stimulus, as labour markets remained resilient.