Singapore: Industrial Production improves in September – UOB

Senior Economist at UOB Group Alvin Liew and Associate Economist Jester Koh comment on the recently released Industrial Production performance in Singapore.

Key Takeaways

The contraction in Singapore’s Sep IP narrowed significantly to -2.1% y/y from Aug’s revised reading of -11.6% y/y (prev: -12.1%). The improvement in Sep’s IP was better than Bloomberg’s consensus of -4.5% y/y and UOB’s estimate of 5.4% y/y. On a seasonally adjusted sequential basis, IP expanded 10.7% m/m sa in Sep, a reversal from the revised -10.8% m/m sa contraction in Aug (prev: 10.5%). Similarly, the Sep m/m sa reading was stronger than Bloomberg consensus for a 8.1% m/m sa expansion and our estimate of 7.0% m/m sa. In the first 9 months of 2023, IP contracted by -5.8% y/y.   

This marks the 12th consecutive month of y/y decline, exceeding the previous worst streak (which was in 2015 that recorded 11 straight months of y/y declines).   

 We maintain our 2023 full-year industrial production forecast at -7.0%. With the Sep IP broadly in-line with the official implied projection (est -1.9% y/y) during the 3Q23 advance GDP release and a smaller contraction in the revised Aug IP reading, 3Q23 manufacturing likely fell by a milder -4.6% y/y (advance estimate: -5.0%) which may push the 3Q23 GDP marginally higher to 0.8% y/y (prev: 0.7%), assuming the other segments remain unchanged.