SINGAPORE (Nikkei Markets) -- Singapore's manufacturing output grew at its fastest pace in five months in November, bucking signs of a slowdown in the global economy and reinforcing the view that trade may have picked up in anticipation of higher U.S. tariffs on Chinese goods next year.
The Singapore Economic Development Board said the city-state's factories and shipyards saw a 7.6% increase in production last month compared to a year ago, helped by a surprise recovery in electronics and continued strength in pharmaceuticals and offshore and marine engineering.
The growth was the fastest since June and came despite a surprise contraction in non-oil exports last month. Analysts had expected November manufacturing to expand by around 4% on year amid a weakening in the global electronics cycle and as economic growth slows in key markets like China.
On a seasonally adjusted month-on-month basis, Singapore's manufacturing output increased by 2.8% in the month, quickening from October's rise of 2.4%.
Singapore's economic growth is widely expected to ease next year with the loss of momentum coming primarily from the manufacturing sector, which accounts for about one-fifth of gross domestic product. According to a quarterly survey by the Monetary Authority of Singapore released earlier this month, private sector economists expect GDP growth to ease to 2.6% next year after an estimated expansion of 3.3% in 2018.
Alvin Liew, a senior economist at United Overseas Bank, said the surprise improvement in November's manufacturing could be the result of increased exports and imports by companies ahead of higher tariffs that will kick in should the U.S. and China fail to resolve their trade dispute by March 1.
There could be a "harsher payback" after the frontloading activity, Liew said in a note. "We still expect industrial production to moderate next year, and we now project an even slower 2.5% (GDP) growth in 2019," he added.
EDB said the output of electronics rose 11.2% year on year, turning around after two consecutive months of contraction. The key semiconductor segment expanded by 16.5%, but data storage and computer peripherals saw double-digit contractions like in previous months.
For the first 11 months of 2018, electronics grew by 9.5% compared to the same period last year.
Pharmaceuticals production expanded 23.9%, while marine and offshore engineering surged 26.6% partly due to a low base last year as well as a higher level of work done in offshore projects, EDB said.
Output from the precision engineering industry fell 8.2% in November from a year ago, marking the first decline after 27 consecutive months of year-on-year increases, according to UOB.
Source: Nikkei Inc