Industrial production crashes past consensus estimates with 3.6% decline in February

Manufacturing headwinds mean lower growth ahead.

Singapore’s industrial production (IP) registered a 3.6% year-on-year decline in February, markedly worse than the 1.3% growth in January and way behind consensus estimates of a 2.2% contraction.

UOB noted that this month’s figure was partially distorted by Lunar New Year celebrations, as fewer working days meant that production values could not keep up at the same phase.

Excluding the Lunar New Year effect, IP still fell by a cumulative 1.1% year-on-year in the January to February period.
UOB warned that there are several headwinds ahead for the manufacturing sector, which could spell lower growth for 2015.

These headwinds include weak economic conditions in the Eurozone and Japan, low global oil prices and the persistently tight labour market.

“With today’s weaker-than-expected IP numbers, we are revising our 2015 IP growth forecast to 1.3%, from 3.5% earlier. That will also move our 2015 GDP growth forecast lower to 2.9%, from 3.3% earlier,” stated UOB.