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Singapore likely to revise 2nd quarter figures downward

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News reports just out buttresses the hypothesis that Singapore’s 2nd quarter performance looks set to be a one-time anomaly.  The AP reports:

SINGAPORE — Singapore’s manufacturing fell in June after rising the previous two months, suggesting the city-state faces a hard slog as it emerges from recession.

Industrial production fell 9.3 percent from a year earlier and dropped a seasonally adjusted 9.2 percent from May, the Trade and Industry Ministry said Friday. Manufacturing rose in May and April after falling the previous six months.

Production of electronics, which account for about a quarter of Singapore’s industrial production, fell 20 percent in June while chemicals fell 8.9 percent. Pharmaceuticals, which are 20 percent of manufacturing, rose 14 percent.

The weak manufacturing for June suggests the government will likely revise down second quarter gross domestic product, which according to preliminary figures grew an annualized, seasonally adjusted 20 percent. The growth figure, announced earlier this month, was calculated largely from data from April and May.

The last sentence was particularly surprising.  I had thought earlier when I wrote the previous post on this that the government had factored all three months into account.  It is now apparent that much of the advance estimate was based on April and May with an extrapolation into June.

Bloomberg adds that the decline was even worse than anticipated by economists:

Manufacturing, which accounts for about a quarter of Singapore’s economy, declined 9.3 percent from a year earlier following a revised 2.1 percent gain in May, the Economic Development Board said today. The median forecast in a Bloomberg survey of nine economists was for a 6.4 percent drop.

On a side note, I wonder why they used the median forecast instead of the standard mean?  Did some of the economists surveyed have unrealistic expectations?  If so, then this may have been shared by the government own economists:

Singapore’s manufacturing slid 2.4 percent in the second quarter, more than the 1.5 percent decline estimated by the government last week, today’s report showed.

The one-off surge in drug production appears to have faded, although the rest of manufacturing have seen a slight improvement regardless:

Pharmaceutical production, which accounts for about 20 percent of manufacturing, climbed 14 percent after surging a revised 139 percent in the previous month. Excluding biomedical manufacturing, production contracted 14.6 percent in June, after shrinking a revised 17.6 percent in May.

Here’s what the official EDB report says:

  • On a seasonally adjusted month-on-month basis, Singapore manufacturing output decreased by 9.2% in June 2009. Excluding biomedical manufacturing, output increased 0.6% in June over May 2009.
  • On a year-on-year basis, manufacturing output decreased 9.3% in June 2009. Output decreased 14.6% if biomedical manufacturing was excluded.

Most of the rest of the news release is based on year-on-year figures. Comparing June’s performance with May’s, one may conclude that the decline this time round has been less severe, which marks an improvement.

Update: Channel News Asia reported this here.

Written by defennder

July 26, 2009 at 10:18 AM

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