Singapore: Industrial Production surprised to the upside in October – UOB

Singapore’s Oct industrial production (IP) expanded for the first time following 12 consecutive months of y/y contraction. Oct’s IP recorded a 7.4% y/y increase from Sep’s revised reading of -1.1% y/y (prev: -2.1%). The Oct IP outturn was better than Bloomberg’s consensus for a contraction of -2.3% y/y and UOB’s estimate of -6.6%. On a seasonally adjusted sequential basis, IP saw a sustained 9.8% m/m increase, following the strong revised 13.1% m/m expansion in Sep (prev: 10.7%). Similarly, Oct’s m/m sa reading was much stronger than Bloomberg consensus for a narrow -0.4% contraction and our estimate of -5.5%. In the first 10 months of 2023, IP contracted -4.5% y/y. The last positive print was recorded in Sep 2022 (1.1% y/y, -0.2% m/m sa). 

IP Outlook – Manufacturing Activity Likely Bottomed Alongside Nascent Signs Of An Upturn In The Electronics Cycle - On a 6 months moving average (6MMA) y/y basis, electronics IP saw incrementally narrower contractions by -2.6% in Oct (Sep: -6.4%, Aug: -9.5%). Electronics NODX also recorded further improvements in Oct, posting a narrower contraction of -5.6% y/y (Sep: -11.6%), corroborating the recent better export performance seen in South Korea and Taiwan. As mentioned in our Oct NODX report, we will not be surprised to see positive y/y readings emerging for electronics NODX as early as Dec 2023, largely driven by base effects given the sharp double digits y/y decline seen from Nov 2022 to Sep 2023.

We revise our 2023 full-year industrial production forecast to -4.0% (prev: -7.0%) given the recent IP outperformance and for 2024, we project IP to expand by 4.0%.