Singapore's Production Unexpectedly Climbs on Pharmaceuticals

By Shamim Adam

Oct. 24 (Bloomberg) -- Singapore's industrial production unexpectedly increased for the first time in three months in September as higher pharmaceutical output offset a decline in electronics manufacturing.

Manufacturing, which accounts for a quarter of Singapore's economy, rose 2.4 percent from a year earlier, following a revised 12.5 percent drop in August, the Economic Development Board said today. The median forecast of seven economists in a Bloomberg News survey had been for a fall of 1.4 percent.

Singapore's industrial output last quarter was the worst in almost seven years as a deepening global slowdown hurt orders for drugs, consumer electronics and other products. The island's economy is in a recession, and the central bank shifted to a ``zero-appreciation'' currency policy to help exporters by keeping prices of goods competitive.

``It's hard to say that this is a turning point, given that it is very likely we are in a global recession,'' said Ho Woei Chen, an economist at United Overseas Bank Ltd. in Singapore. ``It's not clear where the bottom of the cycle is.''

The global financial crisis, which has led to the collapse of banks and forced some countries to approach the International Monetary Fund for loans, is causing economies to contract and increasing the risk of a world recession. That's eroded demand for Asian goods and led Singapore's exports into the worst slump in six years.

Manufacturing fell 11.4 percent in the third quarter, less than the 11.5 percent pace estimated by the government earlier this month. Overall output dropped 1.9 percent in the first nine months of the year.

Drugs, Chips

Industrial production rose a seasonally adjusted 7 percent in September from the previous month, after slipping 1.9 percent in August, today's report showed. Economists were expecting a 2.5 percent gain.

Electronics production fell 14.6 percent last month from a year earlier, following a revised 8.2 percent decline in August. Pharmaceutical production rose 44.4 percent in September, after falling a revised 36.2 percent the month before.

Drugs make up about 22 percent of Singapore's manufacturing and electronics account for about 30 percent.

Singapore's industrial output tends to fluctuate from month to month because of swings in production by drug companies that shut plants for cleaning before making different products.

Computer-chip production in Singapore fell 5 percent in September, from a revised gain of 1.4 percent the month before. Output of consumer electronics dropped 68.6 percent.

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