Singapore Factory Output Growth Slows

Partly due to production in the volatile pharmaceuticals sector contracting, Singapore's manufacturing output expanded by a sharply slower annual pace in August, the Economic Development Board (EDB) said Sept. 26. Manufacturing output rose 5.5% from the previous year, compared with the revised 19.8% in July and 22.5% in June.

Seasonally-adjusted, August output dropped 11% from July, the EDB said.

Manufacturing accounts for a quarter of Singapore's trade-reliant economy.

EDB data pointed to lower production levels in the pharmaceuticals sector as the culprit for the overall slowdown in manufacturing growth. Production of active pharmaceutical ingredients shrank 21.5% after soaring 62.2% in July, due to introduction of a different product mix from August last year, the EDB said.

"So the swing that we saw (in August) is due to something unique in the production process in the pharmaceuticals industry," Alvin Liew, an economist with United Overseas Bank explained. Production facilities can be closed for long periods of cleaning before a new mix is introduced, leaving output from pharmaceuticals volatile.

Liew said an expected slowdown in the electronics sector in the second half of the year has also been considered in his bank's GDP growth forecast for 2006. "We think that demand for electronics in the second half is slowing because global demand is peaking. There is also an anticipated slowdown in key export markets such as the U.S.," he said.

Production of electronics was up 7.2% on the year, slower than the 10.8% expansion in July. Except for semiconductors, which grew 34.8%, output of all other electronic segments including computer peripherals and data storage fell during August.

Copyright Agence France-Presse, 2006

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