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5 months ago
UPDATE 1-Singapore Jan factory output shrinks m/m, ending five-month streak
February 24, 2017 / 6:35 AM / 5 months ago

UPDATE 1-Singapore Jan factory output shrinks m/m, ending five-month streak

3 Min Read

* Jan industrial output +2.2 pct y/y, -6.0 pct m/m

* Semiconductor Jan output +25.8 pct y/y

* Analysts say Lunar New Year holiday had impact

SINGAPORE, Feb 24 (Reuters) - Singapore's industrial production, which surged in the final months of 2016, shrank more than expected in January compared with the previous month, data showed on Friday.

Manufacturing output fell 6 percent from December on a seasonally adjusted basis, more than double the 2.6 percent contraction predicted in a Reuters poll.

The contraction ended a five-month streak of monthly gains and was the biggest shrinkage on a month-on-month, seasonally adjusted basis since January 2014.

On an annual basis, manufacturing output was also weaker than expected in January, growing 2.2 percent compared to the predicted 8.4 percent expansion predicted in the Reuters survey, data from the Singapore Economic Development Board showed.

Analysts said the January data, released by the Singapore Economic Development Board, was impacted by the timing of the Lunar New Year holiday, which began late that month.

Manufacturing output has been seeing exceptionally strong growth the past five months, and the expected end to the trend is seen by some economists as a "sequential correction".

Taking into account both the December and January numbers, manufacturing in Singapore is "still quite resilient", said Michael Wan, an economist at Credit Suisse.

The January slip comes after Singapore's industrial production in December grew at the strongest pace in five years, jumping at a revised 22.1 percent from a year earlier, thanks to a surge in electronics output.

Surge for Electronics

The electronics sector grew 14.8 percent on an annual basis in January. Semiconductor output was 25.8 percent higher than a year earlier

Experts say that the electronics surge partly stemmed from seasonal holiday demand and a global shift toward new technologies.

The late 2016 bounce in electronics shipments has caused many analysts to the central bank will keep its exchange-rate based policy unchanged this year.

Wan said he changed his view on what the Monetary Authority of Singapore will do in April, after the Singapore budget contained measures that could add to inflationary pressures, such as plans to increase water prices 30 percent in two phases, starting in July.

Some measures "should mean stronger inflation in 2017... so we removed our forecast for MAS to ease in April," he said.

Singapore has had lacklustre economic growth 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.

However, the government has warned that the outlook remained hostage to policy and protectionist risks in the United States. (Reporting by Fathin Ungku and Masayuki Kitano; Editing by Richard Borsuk)

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