Singapore’s Production Falls as Electronics, Chemicals Slide

By Shamim Adam

July 24 (Bloomberg) -- Singapore’s industrial production fell for the first time in three months in June as electronics and chemicals output dropped and a surge in pharmaceuticals manufacturing eased.

Manufacturing, which accounts for about a quarter of Singapore’s economy, declined 9.3 percent from a year earlier following a revised 2.1 percent gain in May, the Economic Development Board said today. The median forecast in a Bloomberg survey of nine economists was for a 6.4 percent drop.

The government said this week the recent improvement in drugs and electronics output may falter, preventing a quick recovery from the country’s deepest recession since independence 44 years ago. Singapore raised its 2009 economic forecast July 14, after the manufacturing industry posted its best performance in five quarters in the three months to June.

“The decline in June manufacturing activity reflects the lingering concern of sustainable recovery of demand for the overall manufacturing sector,” said Alvin Liew, an economist at Standard Chartered Bank in Singapore. “Pharmaceuticals output is still a key support for manufacturing as electronics remain weak.”

Singapore’s manufacturing slid 2.4 percent in the second quarter, more than the 1.5 percent decline estimated by the government last week, today’s report showed.

Industrial production fell a seasonally adjusted 9.2 percent in June from the previous month, when it slid a revised 1.8 percent.

Gradual Recovery

Demand for goods from the world’s biggest economies in the U.S., Europe and Japan is still weak, and any pick-up in trade will be “bumpy,” Trade Minister Lim Hng Kiang said this week.

“We have to wait for a more general demand recovery, especially in the developed countries, for Singapore’s economy to be on a sustained growth path,” Lim said. “We should not expect a V-shaped sharp recovery. We’re looking at a more gradual recovery.”

Electronics production plunged 20.4 percent from a year earlier last month, following a revised 22.9 percent decline in May. Electronics make up about 26 percent of total manufacturing output, and shipments of such products have dropped every month for more than two years.

Pharmaceutical production, which accounts for about 20 percent of manufacturing, climbed 14 percent after surging a revised 139 percent in the previous month. Excluding biomedical manufacturing, production contracted 14.6 percent in June, after shrinking a revised 17.6 percent in May.

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