Singapore: Industrial Production improves in September – UOB

The contraction in Singapore’s Sep IP narrowed significantly to -2.1% y/y from Aug’s revised reading of -11.6% y/y (prev: -12.1%). The improvement in Sep’s IP was better than Bloomberg’s consensus of -4.5% y/y and UOB’s estimate of 5.4% y/y. On a seasonally adjusted sequential basis, IP expanded 10.7% m/m sa in Sep, a reversal from the revised -10.8% m/m sa contraction in Aug (prev: 10.5%). Similarly, the Sep m/m sa reading was stronger than Bloomberg consensus for a 8.1% m/m sa expansion and our estimate of 7.0% m/m sa. In the first 9 months of 2023, IP contracted by -5.8% y/y.   

This marks the 12th consecutive month of y/y decline, exceeding the previous worst streak (which was in 2015 that recorded 11 straight months of y/y declines).   

 We maintain our 2023 full-year industrial production forecast at -7.0%. With the Sep IP broadly in-line with the official implied projection (est -1.9% y/y) during the 3Q23 advance GDP release and a smaller contraction in the revised Aug IP reading, 3Q23 manufacturing likely fell by a milder -4.6% y/y (advance estimate: -5.0%) which may push the 3Q23 GDP marginally higher to 0.8% y/y (prev: 0.7%), assuming the other segments remain unchanged.