Factory output growth accelerates to 15.4% in August, but undershoots estimates

Singapore's factory output surged 15.4% year-on-year in August, surpassing the 6.9% increase witnessed in July, but falling short of analysts' expectations of an 18.3% expansion, according to data from the Economic Development Board (EDB). Excluding the volatile biomedical manufacturing sector, output grew 17% year-on-year, mirroring the 8.2% increase recorded in July, the EDB reported on Monday.

On a seasonally adjusted monthly basis, factory output declined 0.5% in August, marking a reversal from July's 2.3% gain. The majority of manufacturing clusters experienced year-on-year production increases, with the chemicals sector being the exception. Precision engineering saw the largest jump, expanding 33.9% year-on-year, driven by higher production of semiconductor equipment in the machinery and systems segment.

The electronics cluster's production expanded 28.5% year-on-year, fueled by robust demand for servers, semiconductors, and data storage products, particularly in artificial intelligence-related applications. Transport engineering grew 9.5%, led by higher production of aircraft parts and maintenance, repair, and overhaul jobs in commercial airlines.

General manufacturing industries expanded 1.5% in August, slower than July's 5.5%, driven by increased output of beverage products, commercial printing, and metal doors and windows. The volatile biomedical manufacturing sector's output grew by 0.4% in August, supported by higher production of medical devices in the medical technology segment, despite a decline in the pharmaceuticals segment due to a shift in active pharmaceutical ingredient production.

In contrast, chemicals manufacturing continued to decline, down 12.7% in August, primarily due to weaker performance in the petroleum and petrochemical sectors, which were impacted by plant maintenance and constrained production due to softer demand and supply disruptions.