SINGAPORE (Thomson Financial) - Singapore's manufacturing output is expected to reverse two consecutive months of contraction in January with some improvement in electronics production and a likely rebound in pharmaceutical output, economists said.
Six economists polled by Thomson Financial expect manufacturing output growth of between 2.7-17.7 percent last month from a 1.7 percent decline in December and a 0.5 percent drop in November.
The surprise expansion in non-oil domestic exports last month boosted hopes that manufacturing output will recover.
The Economic Development Board will release the manufacturing output data at midday.
The economy struck a good chord at the start of the year amid the gloom hovering over the global economy, as non-oil domestic exports unexpectedly grew 2.8 percent in January from a year ago when most economists were expecting a contraction.
Electronics shipments in January have had a narrower-than-expected decline and the petrochemical sector registered a relatively strong growth that helped the overall non-electronics exports to post good growth of 6.2 percent.
'The January non-oil domestic exports came in better-than-expected, but the boost essentially came from petrochemicals,' said Selena Ling, economist at Oversea-Chinese Banking Corp.
'There was no sight of the so-called pharmaceuticals recovery and electronics exports remain lacklustre, albeit improving. The January industrial production numbers are likely to mirror this pattern.'
Ling expects January manufacturing output to have grown at an annual pace of 2.7 percent in January, while registering a 0.1 percent decline compared to a month ago.
With more uncertainties hanging in the air and fears of US recession not completely shaken off, any positive leads on the economy can make an unexpected turn.
'There is no escaping the uncertainties clouding the outlook for the United States and how much that will pull down global demand for Singapore's exports remains to be seen,' said David Cohen, chief economist at Action Economics.
Cohen said that people are a lot more concerned about the downturn in electronics exports and production rather than pharmaceuticals, which led Singapore's gross domestic product to contract in the fourth quarter from the third.
Manufacturing output last year grew at 5.8 percent, half its annual pace in 2006, pulled down by the slump in biomedical manufacturing in the fourth quarter.
The relocation of some disk-drive production to lower-cost sites had been a drag on manufacturing production in Singapore last year, said Cohen.
'We might be finished with that adjustment so now will be more dependent on the trajectory of global demand. There's no guarantee that that is going to do well.'
Below are the forecasts for January manufacturing output:
Year-on-year:
CIMB-GK - 7.5 percent growth
Action Economics - 7.5 percent growth
Forecast - 17.7 percent growth
OCBC - 2.7 percent growth
Standard Chartered Bank - 4.3 percent growth
UOB - 6.5 percent growth
Month-on-month:
Action Economics - 4.5 percent growth
CIMB-GK - 2.0 percent growth
Forecast - 5.9 percent growth
OCBC - 0.1 percent contraction
Standard Chartered Bank - 1.0 percent contraction
UOB - 1.0 percent growth
(1 US dollar = 1.40 Singapore dollars)
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