Industrial production may have jumped to 14.2% in August

On Monday 26 September, the Economic Development Board will announce August industrial production numbers. Pharmaceuticals will again feature significantly in the y/y headline figure due to the very low base in August 2010, when pharmaceutical production contracted by 32% m/m. This time around, assuming flat m/m growth in pharmaceutical production, this would still translate to an increase of almost 17% y/y.

Meanwhile, electronic production should remain in the doldrums given the continued decline in the US semiconductor book-to-bill ratio, which fell to 0.86 in July 2011 (the 10th consecutive month where the index stayed below 1.0). On balance, we forecast a headline print of 14.2% y/y. While this number would be a strong rise from July‟s 7.4% y/y, it is largely on the back of the pharmaceuticals base effect. Importantly, ex bio, industrial production should contract by about 5.8% y/y, while we expect headline industrial production (seasonally adjusted) to have turned negative in August on a m/m basis.