Singapore: Industrial Production surprised to the upside in October – UOB

Senior Economist at UOB Group Alvin Liew and Associate Economist Jester Koh review the latest Industrial Production results in Singapore.

Key Takeaways

Singapore’s Oct industrial production (IP) expanded for the first time following 12 consecutive months of y/y contraction. Oct’s IP recorded a 7.4% y/y increase from Sep’s revised reading of -1.1% y/y (prev: -2.1%). The Oct IP outturn was better than Bloomberg’s consensus for a contraction of -2.3% y/y and UOB’s estimate of -6.6%. On a seasonally adjusted sequential basis, IP saw a sustained 9.8% m/m increase, following the strong revised 13.1% m/m expansion in Sep (prev: 10.7%). Similarly, Oct’s m/m sa reading was much stronger than Bloomberg consensus for a narrow -0.4% contraction and our estimate of -5.5%. In the first 10 months of 2023, IP contracted -4.5% y/y. The last positive print was recorded in Sep 2022 (1.1% y/y, -0.2% m/m sa). 

IP Outlook – Manufacturing Activity Likely Bottomed Alongside Nascent Signs Of An Upturn In The Electronics Cycle - On a 6 months moving average (6MMA) y/y basis, electronics IP saw incrementally narrower contractions by -2.6% in Oct (Sep: -6.4%, Aug: -9.5%). Electronics NODX also recorded further improvements in Oct, posting a narrower contraction of -5.6% y/y (Sep: -11.6%), corroborating the recent better export performance seen in South Korea and Taiwan. As mentioned in our Oct NODX report, we will not be surprised to see positive y/y readings emerging for electronics NODX as early as Dec 2023, largely driven by base effects given the sharp double digits y/y decline seen from Nov 2022 to Sep 2023.

We revise our 2023 full-year industrial production forecast to -4.0% (prev: -7.0%) given the recent IP outperformance and for 2024, we project IP to expand by 4.0%.