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MARCH industrial output fell by a third from last year, the Economic Development Board said yesterday. The scale of the decline exceeded earlier estimates from a Bloomberg poll of a 24 per cent drop.
Economists said that weak sentiment was holding back output, with manufacturers running down inventory instead. Industrial output fell 13.9 per cent from February, on a seasonally adjusted basis. Total output for the first quarter to March fell 26.1 per cent from last year.
HSBC economist Robert Prior-Wandesforde said that the numbers clashed with export figures released last week, which had suggested that exports - specifically non-oil domestic exports, or NODX - rose over 10 per cent from February. Most of Singapore's production is exported.
'One possible implication of the output and export releases is that inventories were brought down significantly as companies met the strength of external demand by drawing down stocks,' Mr Prior-Wandesforde said.
He noted that data problems could be present 'although there remains a nagging worry that the Singapore economy is continuing to underform its Asian neighbours'.
Citi economist Kit Wei Zheng noted that figures were consistent with the 19 per cent seasonally adjusted month-on-month plunge in non-oil retained imports of intermediate goods last month.
He said that the weak industrial production results despite stronger recovery in NODX 'suggests manufacturers remain cautious amid limited demand visibility'. 'For now, export data is improving faster than production data . . . reinforcing the view that while export demand is stabilising, manufacturers do not yet have the confidence to ramp up production, but are instead meeting export demand by drawing down on inventory.'
Mr Kit noted that Q1 GDP figures could see an upward revision to -10.7 per cent, from initial advance estimates of 11.7 per cent contraction released earlier this month by the government as production for the quarter was somewhat higher than the 29 per cent fall in the government's forecast.
The EDB said that the electronics sector, as expected, was a main factor in the decline, falling 34.6 per cent year-on-year for an almost 40 per cent drop in Q1. Biomedical output also disappointed, contracting 54.8 per cent from last March, for a near 30 per cent decline in the quarter.
'Pharmaceuticals are once again giving reason for concern,' said Mr Prior-Wandesforde.
Transport engineering rose just one per cent while general manufacturing was down 10.5 per cent, in year-on-year terms. Chemicals contracted 22.7 per cent and precision engineering fell 29.6 per cent.
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