No recession but slower manufacturing output growth expected in 2023: UOB

This is due to the faltering performance of electronics.

There is more likely a slower manufacturing output headline growth next year as the dismal electronics sector performance poses risks of weakened industrial production (IP) trajectory, UOB, said.

With this, the UOB’s forecast was still at 4.5% whilst raising concerns on the lack of labour supply and rising costs.

“The expected increase in foreign labour supply as borders reopen further will augment the existing labour supply within Singapore’s labour intensive industries such as maritime, construction, selected manufacturing and services industries,” UOB added.

Whilst it noted that there is no recession next year, it sees that the tight labour market and increased cost of living will raise recession probability next year.

Electronics sector contracted for first time after two years

The purchasing manufacturers’ index (PMI) barely expanded in August as the electronics sector shrunk for the first time since July 2020, UOB said.

“The dismal electronics reading was due to a faster rate of contraction in the inventory index (49.2 from 49.7 in July) and finished goods index (49.1 from 49.3 in July) while the sub-indexes of new orders (49.8 from 51.2), new exports (49.9 from 51.3), and output (49.4 from 50.2) dipped into contraction territory from expansion in July,” said UOB in its analysis on the PMI index.

In contrast, there is a positive outlook from transport engineering, general manufacturing, and precision engineering, which will improve overall manufacturing growth.