Singapore Production Unexpectedly Rises on Pharmaceutical Gains

By Shamim Adam

Aug. 26 (Bloomberg) -- Singapore’s industrial production unexpectedly rebounded in July, recording the biggest gain in 16 months as pharmaceuticals output surged.

Manufacturing, which accounts for about a quarter of Singapore’s economy, rose 12.4 percent from a year earlier following a revised 9 percent decline in June, the Economic Development Board said today. The median forecast in a Bloomberg survey of nine economists was for a 1 percent drop.

Singapore raised its 2009 forecast for exports this month, predicting overseas shipments may drop a less-than-expected 10 percent to 12 percent as global demand improves. The government has said 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.

“The positive effects of the recovery in the global economy should cascade down to the exports-oriented manufacturing sector fairly quickly,” said Irvin Seah, an economist at DBS Bank Ltd. in Singapore. “Continued improvement in this sector is expected in the coming months, although downside risks remain in the sustainability of the current surge in the pharmaceutical industry.”

Industrial production rose a seasonally adjusted 23 percent in July from the previous month, when it slid a revised 9 percent.

Singapore’s purchasing managers’ index showed manufacturing expanded for a third straight month in July. Export orders and output gained last month, including those for electronics, according to an Aug. 4 report by the Singapore Institute of Purchasing & Materials Management.

Economic ‘Storm’

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 island’s economy has stabilized after an unprecedented “storm” earlier in the year, Prime Minister Lee Hsien Loong said this month.

Electronics production fell 5.6 percent from a year earlier last month, following a revised 19.2 percent decline in June. 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, surged 139.2 percent after gaining a revised 12 percent in the previous month. Excluding biomedical manufacturing, production contracted 7.4 percent in July, after shrinking a revised 13.8 percent in June.

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