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Singapore manufacturing sets positive tone for final quarter

Demand for electronics holds, but overall growth rate expected to moderate next year

SINGAPORE (Nikkei Markets) -- Singapore's manufacturing output rose for the 15th straight month in October as electronics continued its surge, indicating the growth momentum remained strong going into the final quarter of the year.

Data released by the Singapore Economic Development Board on Friday showed manufacturing output grew 14.6% in October from a year ago, slightly faster than September's revised expansion of 14.4% and in line with the forecasts of most economists.

October's output was 0.7% higher compared to the previous month after seasonal adjustments, turning around from September's on-month decline of 1.0%.

The latest data comes just one day after Singapore raised its growth forecast for this year after gross domestic product expanded at a pace that beat expectations, thanks to a surge in manufacturing.

Most economists expect the robust global demand that has benefited Singapore's factories in recent quarters to continue, although they don't rule out some moderation.

"With the global tech sector expected to sustain some momentum, Singapore's electronics cluster is likely to continue to register firm growth in the next few months," said United Overseas Bank economist Ho Woei Chen. However, growth is likely to moderate in the next two months due to the high base in November and December last year, she said.

The Ministry of Trade and Industry sees growth moderating next year due to an expected slowing in the economies of China and the European Union that would offset stronger growth as well as the base effects from the strong performance in 2017.

Singapore on Thursday raised its growth forecast for this year to between 3% and 3.5% from the previous forecast of 2% to 3%.

The revision followed a stronger-than-expected performance in the third quarter when the economy grew 5.2% on-year, fuelled by an 18.4% surge in manufacturing, which accounts for 20% of GDP.

Friday's manufacturing data showed electronics was again the start performer as output expanded 45.1% over the same month last year. The gain was largely driven by the semiconductors segment, which posted robust growth of 64.6%.

According to UOB's Ho, the semiconductors segment has been growing at a double-digit pace for 20 straight months.

The infocomms and consumer electronics segment grew 5.7% while the rest of the electronic segments declined.

"Cumulatively, output of the electronics cluster expanded 38.1% from January to October this year, compared to the same period last year," EDB said in a statement.

EDB said the precision engineering cluster's output grew 23.6% on-year in October, boosted by higher production of dies, moulds, tools, jigs and fixture, optical instruments and metal precision components.

Jigs and fixtures are special purpose tools used to facilitate production.

Production of chemicals rose 15.0%, helped by strong growth in petrochemicals whose year-ago production was affected by plant shutdowns for maintenance.

However, biomedical manufacturing and transport engineering saw decreases in output, hurt by weakness in pharmaceuticals and marine and offshore engineering, respectively.

--Kevin Lim

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