Jan output rises 6.9% on 59.8% biomed surge

SINGAPORE'S factory output expanded 6.9 per cent year on year in January, thanks to a production surge in the biomedical cluster, the latest figures show.

The Economic Development Board (EDB) said the month on month index was up 5.1 per cent on a seasonally adjusted basis, while the three-month moving average index rose 1.4 per cent year on year.

Last month, the biomedical manufacturing cluster shot up by 59.8 per cent year on year, due to a 63.1 per cent jump in the pharmaceuticals segment. Also, the medical technology segment output went up 32.6 per cent due to increased sales of a variety of medical technology products to US, Europe and Japan.

In a note, UOB economist Ho Woei Chen said the 'pharmaceutical segment will continue to fluctuate widely due to the lumpiness of output and the early stage of development in Singapore means that the industry is dominated by relatively small number of players'.

Output of the chemicals cluster grew 4.3 per cent, as higher output was seen in all segments.

For example, production of petrochemicals and specialty chemicals rose 5.1 per cent and 9.9 per cent respectively, while the petroleum segment inched up 0.1 per cent as there were some maintenance shutdowns in refineries.

Precision engineering production expanded 1.3 per cent, helped by a strong performance by machinery & systems. Output rose 9.5 per cent as manufacturers produced more machinery such as industrial process control equipment, generators, engines, switchboards, switchgears and transformers for export.

Due to lower production of metal and plastic precision components and other things, the precision modules & components segment shrank 3.8 per cent.

Similarly, the electronics cluster shrank 6.7 per cent, even though computer peripherals expanded 14.1 per cent.

This resulted from contractions in other segments, like chips, where output dropped 10.1 per cent, and data storage, whose output fell by 6.3 per cent. Likewise, the infocomms & consumer electronics and other electronic modules & components segments contracted by 8.7 per cent and 9.6 per cent respectively.

Noting that this was the first electronics contraction in eight months, Ms Ho said this 'probably suggested that the weakening external demand could start to bite the domestic manufacturing sector'.

She was also concerned about the transport engineering cluster, which contracted by 10.3 per cent in January, led by the 17.3 per cent drop in marine & offshore engineering output.

The EDB said this came about due to 'very high output in January last year and lower value of work done for ship repairing and shipbuilding this January'.

In contrast, land transport grew 39.9 per cent with demand from the European Union and Asia driving up output of land vehicle components. The aerospace segment grew 1.6 per cent with higher production of aircraft parts.

The general manufacturing industries grew 11.6 per cent in January, led by a 16.5 per cent surge in output of food, beverages and tobacco products.

The printing industries increased their production of printed media by 5.6 per cent.

'Overall, we expect the manufacturing sector to register similar growth pace of 5.5 per cent in 2008, compared with 5.8 per cent in 2007,' said Ms Ho. 'This will be led by the biomedical cluster as the correlation between the biomedical manufacturing and the economic cycle is likely to be much less than that with the electronics manufacturing which will likely maintain a moderate growth pace this year.'