FACTORIES cranked up production at a record pace last month, impressing economists so much that at least two of them have upgraded their full-year growth forecasts for Singapore.
Manufacturing output shot up 43 per cent in March compared with the same month a year ago, the biggest jump on record and the fourth straight month of above-expectations production.
The surge was powered by electronics manufacturers, who produced double the number of semiconductors compared with a year ago, said the Economic Development Board (EDB) yesterday.
Even a widely anticipated drop in drugs output turned out to be smaller than expected and failed to dampen the strong rally in manufacturing, which makes up a quarter of the economy.
'In short, Singapore's industrial sector is booming,' said HSBC economist Robert Prior-Wandesforde.
He has raised his economic growth forecast for this year by 2.5 percentage points to 9.5 per cent - higher than the Government's projection - and did not stop there.
'We... recognise the strong possibility that Singapore will register double-digit growth this year,' he said.
The Government earlier this month upgraded its official 2010 growth forecast to between 7 per cent and 9 per cent, from an earlier projection of 4.5 per cent to 6.5 per cent growth.
It had estimated that manufacturing grew a healthy 30 per cent in the first quarter, but the latest figures now put that growth at a higher 33 per cent.
This would bring first-quarter growth to a higher-than-forecast 14 per cent.
With this in mind, Barclays economist Leong Wai Ho has pushed up his own full-year growth forecast from 7 per cent to 8.5 per cent.
'In this regard, we have underesti- mated first-quarter growth,' he said yesterday.
Singapore's V-shaped rebound from the recession has been significantly powered by the key electronics sector, which has turned around after a two-year slump.
The cluster expanded by a stunning 73.8 per cent last month to make it the best-performing segment within the manufacturing sector.
Strong demand for popular consumer products such as smartphones as well as Apple's iPad may have contributed to the lift in electronics, said Mr Leong.
Launches of such products triggered a surge in orders for makers of electronic components in the region, pushing up the price of memory chips by 30 per cent in the month and boosting demand for integrated circuits and personal computer parts.
The good news is that analysts believe electronics, which accounts for about a third of the manufacturing sector, will continue to do well as global demand for semiconductors and hard disk drives improves.
That aside, other segments of manufacturing also grew strongly last month.
Biomedical production grew 65 per cent, precision engineering was up 41 per cent, chemicals rose 23 per cent, and general manufacturing - such as printing and food - increased 25 per cent.
Transport engineering, however, continued to be the sole cluster in the red, as aerospace and marine and off- shore engineering activities decreased, said the EDB yesterday.
But economists agree that the fiery pace of growth in manufacturing output will probably slow.
Already, the sector contracted a slight 1.5 per cent last month from the month before.
United Overseas Bank economist Chow Penn Nee warned that the low base effect will taper off from next month onwards, as manufacturing started to pick up in April last year.
'We might not see growth rates of the same magnitude as last month,' she said.
But Ms Chow added that the sector should remain on track for the rest of the year, as demand from other countries rebounds strongly.
Source: Straits Times, 27 Apr 2010