March 24, 2017 / 5:50 AM / 4 months ago

UPDATE 1-Singapore February factory output rises faster than expected

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SINGAPORE, March 24 (Reuters) - Singapore's industrial production rose more than expected in February from a year earlier thanks to a surge in electronics manufacturing output, but analysts expect global conditions will weigh on manufacturing in months ahead.

Manufacturing output in February rose 12.6 percent from a year earlier, data from the Singapore Economic Development Board showed on Friday, exceeding the median forecast in a Reuters survey which predicted a 10.8 percent expansion on-year.

Industrial production on a month-on-month and seasonally adjusted basis, however, fell 3.7 percent in February. The median forecast was for a rise of 0.4 percent but analysts said January and February single-month data was likely skewed by "seasonal distortions" such as the timing of the long Lunar New Year holiday, which fell in February last year but late January this year. Many factories close or scale back operations during this period.

In January, industrial output rose 2.2 percent on-year and fell 6.0 percent on-month.

Singapore's February industrial production increased on the back of a surge electronics output which grew 39.8 percent compared to the same month last year.

This comes after Singapore's exports in February grew at the strongest pace in five years, jumping 21.5 percent from a year earlier, thanks to a surge in demand of tech products and shipments to China.

Despite strong electronics exports, some analysts believe industrial production will begin to moderate in coming months because of lower regional demand.

"There should be some cuts in the China smart phone market and demand," said Credit Suisse analyst Michael Wan, noting additional tightening in China's property sector will slow domestic demand.

Singapore has had lacklustre economic growth over the past two years as sluggish global demand weighed on exports. Growth picked up late last year with the economy expanding at a faster pace in the final three months than initially thought.

Most analysts now expect Singapore's central bank to keep monetary policy unchanged at its next policy review in April.

However, the government has warned that the outlook remains hostage to policy and protectionist risks in the United States.

"There's a bit too much optimism about tax cuts and fiscal policy boosts from the US, so that should crimp the growth momentum a bit as we move into the next few months", Wan said. (Reporting by Fathin Ungku; Editing by Sam Holmes)

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