Singapore factory output records strongest rise in 5 years

Singapore's industrial production in December grew at the strongest pace in five years as electronics output surged, raising the chances of an upward revision to fourth-quarter growth. Manufacturing output in December jumped 21.3 percent from a year earlier, data from the Singapore Economic Development Board showed, far exceeding the median forecast in a Reuters survey of 9.5 percent.
Singapore has seen lacklustre economic growth the past two years as sluggish global demand weighed on exports. Growth picked up late last year, however, helped by an increase in exports to China and strength in manufacturing.
On a month-on-month and seasonally adjusted basis, industrial production rose 6.4 percent in December exceeding the median forecast for a contraction of 5.8 percent.
"The low base of last year has definitely helped ... but nonetheless just looking at the sequential growth, the strong end to the year reflects the underlying improvement in the global picture," said Song Seng Wun, economist for CIMB Private Banking.
Manufacturing output in the electronics sector in December jumped 49.4 percent, supported by the semiconductors segment, which recorded an increase in output of 94.0 percent, the data showed.
Experts say that a surge in electronics manufacturing is partly related to seasonal holiday demand, as well as an underlying global shift toward new technologies.
"The whole mega trend of the internet of things is probably going to fuel semiconductor growth in the next couple of years" said Kai Fai Ng, president of the Southeast Asian branch of SEMI, an international association of micro- and nano-electronics industries.
The opening of semiconductor giant Micron Technology Inc's expanded NAND flash memory fabrication facility in Singapore in September played a "pretty huge" role in the surge in electronics manufacturing, Ng added.
Wayne Allan, Micron's vice president of global manufacturing told Reuters earlier this week it saw a significant increase in Singapore production in the second half of 2016 from the first.
He said Micron likely accounts for around 20 percent of Singapore's semiconductor manufacturing.
The government will probably upgrade full-year 2016 GDP growth to 2 percent from its advance estimate of 1.8 percent, Chua Hak Bin, senior economist for Maybank Kim Eng, said in a research note.
"Growth is recovering and inflation is picking up," Chua added. Fourth-quarter GDP growth is likely to be revised up to 12.9 percent on a quarter-on-quarter annualised basis, analysts at Citi said in a research note.
The government's advance estimate, released in early January, was that the economy grew 9.1 percent in the October-December quarter on an annualised basis, compared to July-September.