Singapore’s factory output plunged in August by the most in almost four years, a sign that the city state’s manufacturing downturn could be deepening.
Industrial production dropped 8% from a year earlier, the weakest since December 2015 and worse than all the forecasts in a Bloomberg survey of economists. It shrank 7.5% on a seasonally adjusted monthly basis, the Economic Development Board said in a statement Thursday.
Electronics was the biggest culprit for the downturn, plunging 24.4% in August from a year ago, the worst reading for that industry since the start of 2012.
The surprisingly intense weakening is a fresh blow for growth prospects in trade-reliant Singapore after last month’s data had given economists hope that the pain could be easing. U.S.-China and Japan-South Korea trade tensions, as well as a broader slowdown in China and elsewhere, continue to weigh on Singapore, where the government has slashed its full-year growth forecast to near zero.
“Given that the U.S.-China trade war remains at a stalemate between hope and gloom—partly depending on Trump’s tweets—even the prospect of a mini trade deal pending the early October trade talks may not suffice to lift the domestic manufacturing sector for now,” Selena Ling, Singapore-based head of treasury research and strategy at Oversea-Chinese Banking Corp., said in a research note after the report.
The data may give the Monetary Authority of Singapore reason to ease policy at its October meeting. The MAS, which uses the exchange rate as its main tool, left its policy settings unchanged in April.
Singapore officials have said that while the slump heading into the second half of the year has been stark, it wasn’t yet deep or sustained enough to warrant fiscal stimulus, as labor markets remained resilient.
