Bloomberg News

Singapore Output Misses Estimates on Electronics Slump: Economy

March 26, 2012

Singapore’s industrial production grew less than economists estimated in February as a slump in electronics output persisted.

Manufacturing rose 12.1 percent from a year earlier after a revised 9.6 percent decline in January, the Economic Development Board said today. The median of 13 economists surveyed by Bloomberg News was for a 16.2 percent gain.

Asia’s manufacturing rebound from the first two months of the year, when the output numbers were distorted by the Lunar New Year holidays shutting factories, may be limited by Europe’s sovereign-debt crisis and China’s slowing economic growth. The region’s currencies have declined in March even as six months of the strongest U.S. job growth since 2006 bolstered the outlook for demand.

“It’s a timely reminder that while activity may not be crashing, they are still slowing down across Asia,” said Edward Lee, Singapore-based regional head of rates strategy at Standard Chartered Plc. “Some data may have surprised on the upside but the key takeaway is that growth is still moderating.”

Asian stocks fell today, extending last week’s loss, amid concern exporter earnings are deteriorating. The MSCI Asia Pacific Index (MXAP) fell 0.5 percent as of 3:14 p.m. in Tokyo.

A leading index for China rose at a slower pace in February, a report showed last week, adding to evidence of moderating growth that may prompt Premier Wen Jiabao to loosen policy further. A preliminary reading of the purchasing managers’ index by HSBC Holdings Plc and Markit Economics showed China’s manufacturing may contract for a fifth month in March.

Turmoil Eases

While the euro area’s turmoil has eased after the European Central Bank last month boosted liquidity through three-year loans to banks and European Union leaders this month sealed a second Greek bailout package, Italian Prime Minister Mario Monti has warned that Spain’s struggle to control its finances could reignite the debt crisis.

“The coming weeks may well bring a slew of further discouraging data,” said Frederic Neumann, Hong Kong-based co- head of Asian economic research at HSBC. “Markets may not like it. But it is important to see through temporary distortions. Only in a couple of months will it become clear whether the global, and indeed Asia’s, recoveries are proceeding as expected.”

German Confidence

In Wellington today, a government report showed New Zealand posted a trade surplus in February as imports fell to a 13-month low amid a labor dispute at the nation’s largest port. Shipments overseas also declined.

German business confidence probably held at a seven-month high in March, suggesting Europe’s largest economy will return to growth even as the sovereign-debt crisis curbs demand for its exports, a report may show today. The Ifo institute’s business climate index, based on a survey of 7,000 executives, stayed at February’s reading of 109.6, according to economists in a Bloomberg News survey.

Elsewhere in Europe, reports may show Italian consumer confidence weakened in March, while Poland’s unemployment rate may have increased to 13.5 percent, the highest level since April 2007, Bloomberg surveys of economists showed.

In the U.S., Federal Reserve Chairman Ben S. Bernanke is scheduled to speak at a conference in Arlington, Virginia, while Philadelphia Fed President Charles Plosser gives remarks at a conference in Paris. The Chicago Fed will release its national economic activity index for February.

Drug Production

Singapore’s industrial production fell a seasonally adjusted 1.1 percent in February from January, when it rose a revised 2.3 percent from the previous month, today’s report showed. The median of six estimates in a Bloomberg News survey was for a 5 percent gain.

“We continue to believe that industrial production will weaken strongly as external demand slows down,” Cynthia Kalasopatan, an economist at IdeaGlobal in Singapore, said before the report. “The expected global economic slowdown will likely affect exports and thus weaken industrial production overall.”

Electronics production decreased 6 percent from a year earlier in February, while pharmaceutical output climbed 37.7 percent after gaining a revised 33.3 percent in January. The performance of Singapore’s pharmaceutical industry is volatile as production swings by companies such as GlaxoSmithKline Plc can cause industrial output to fluctuate from month to month. Drug companies sometimes shut plants for cleaning before making different products.

“Barring any unforeseen drop in pharmaceutical production due to plant shutdown, overall manufacturing growth is expected to gradually pick up from the second quarter onwards,” Irvin Seah, an economist at DBS Group Holdings Ltd. in Singapore, said before the report.

To contact the reporter on this story: Shamim Adam in Singapore at sadam2@bloomberg.net

To contact the editor responsible for this story: Stephanie Phang at sphang@bloomberg.net


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