Factory output back to growth in July, beating market expectations

Singapore's manufacturing sector returned to growth in July with a performance that topped market expectations, according to data released on Aug 26.

- Sue-Ann Tan

Factory output expanded by 1.8 per cent in July year on year, with all but the biomedical industry recording growth, said the Economic Development Board (EDB).

It reversed the downwardly revised 4.3 per cent contraction in June, and beat the 0.2 per cent rise that was the median forecast by analysts in a Bloomberg poll.

Excluding biomedical manufacturing, output increased 3.4 per cent.

On a seasonally adjusted month-on-month basis, manufacturing output expanded 10.1 per cent. Excluding biomedical manufacturing, it grew 4.1 per cent.

July's positive turn is in line with the Government's view that Singapore's manufacturing sector will see a gradual recovery in the second half of 2024.

In particular, the key electronics cluster was projected to recover more strongly, supported by robust demand for smartphone, PC and artificial intelligence-related chips, the Ministry of Trade and Industry (MTI) said earlier in August.

Mr Barnabas Gan, RHB acting group chief economist and head of market research, said that Singapore's manufacturing and traderelated sectors will contribute to overall growth in the second half of 2024.

He noted that drivers for the optimistic outlook include stronger than expected July industrial production performance that topped the market's expectations, bright spots in specific industries and the relatively positive outlook on the electronics cluster.

"We saw a strong expansion in the key electronics cluster, specifically semiconductors, computer peripherals and data storage and other electronic modules," he said.