Singapore's IP outturns 'notoriously volatile': BBVA

The Euro crisis badly hurt Singapore's industrial production which fell sharply to 4.5%.

Here's more from BBVA:

Since our last Quarterly Outlook published in May, the fallout of the European crisis on external demand has caused Asia’s growth momentum to slow by somewhat faster than previously expected. In particular, weak external conditions have spilled over to domestic demand. GDP growth in China (7.6% y/y) and Korea (2.4% y/y) continued to slow in the second quarter, with the outturns below previous expectations.

Singapore showed a slight pickup on an overyear basis (to 1.9% y/y from 1.4% in 1Q), but it posted a contraction on a sequential basis (-1.1% q/q annualized), on sluggish exports. The weak outturns and diminishing prospects of a rapid revival in external demand have led policymakers to cut their official growth forecasts, such as in Indonesia (to 6.1%-6.5% from 6.3%-6.7%) and Korea (to 3.0% from 3.5%).

The slowdown is especially evident in the latest trends in industrial production, which have fallen sharply on a year-over-year basis for major manufacturing hubs such as Korea (1.5% y/y), Taiwan (-1.5% y/y) and Singapore (4.5% y/y). Japan’s industrial production has faltered recently, even as the country rebounds from last year’s earthquake.

In Singapore, where IP outturns are notoriously volatile, June (7.6% y/y) showed a marked improvement from earlier in the year, but production growth is expected to remain sluggish in the coming months due to the weak external environment.

Meanwhile, manufacturing PMIs have also been trending downward. Korea’s PMI (49.4) fell below the 50 expansion/contraction breakeven in June for the first time since January, on weak new export orders, and Australia’s PMI fell by 6.9 points in July to 40.3 due to concerns about demand.