More hard knocks for S'pore manufacturers
THE manufacturing sector declined 5.2 per cent last year over 2014 - the worst performance for 14 years.
The dismal 12 months was underscored by a 7.9 per cent decline in output last month - the 11th straight month of decline.
The broad-based fall in production last month was steeper than the 7.2 per cent slide tipped by economists in a Bloomberg poll and worse than the revised 6.4 per cent drop in November, according to Economic Development Board data yesterday.
The decline last year highlights the deepening recession the sector is going through.
"This is the sharpest annual contraction in the sector since the dot.com bust in 2001 when industrial production fell 11.6 per cent," said DBS economist Irvin Seah.
Firms are feeling the heat.
Lau Tai San, chairman and managing director of Kim Ann Engineering, a speciality metals supplier to original equipment manufacturers (OEMs), said the fall in OEM volumes is hurting supporting industries like engineering shops, fabrication shops and subcontractors.
"When the economy is in very tight conditions, payments collection usually gets more difficult. This year, it's already started. Some of my customers are lengthening their payments by more than 30 days," said Mr Lau, who is also vice-president of the Singapore Chinese Chamber of Commerce and Industry.
"We also try to sympathise with customers, gauge them individually. Hopefully, banks can do likewise. Market sentiment is not looking very good but we believe after mid-year maybe there will be a slight improvement."
Economists are not expecting a turnaround any sooner than that.
Last month's fall was due to falling orders on all fronts but one.
Biomedical manufacturing - which surged 16.2 per cent from a year ago - was the only one of Singapore's six manufacturing clusters to expand last month.
If this volatile sector is excluded, output fell 13 per cent.
Electronics output dropped 12.4 per cent from a year earlier, with semiconductor output plunging 17.8 per cent.
"In fact, semiconductor output - comprising nearly two-thirds of total electronics output - has contracted for 18 out of the past 24 months," said UOB economist Francis Tan.
Mr Seah said the 40.3 per cent decline in the marine and offshore engineering cluster was the "most appalling".
"Absent an oil price recovery, outlook for the sector is bleak in the medium-term," he added.
Economists were split as to
whether the bleaker December data could mean a downward revision to Singapore's fourth quarter gross domestic product out next month.
Citi economist Kit Wei Zheng said it was possible.
"We expect downward revisions in services given the slowdown in trade-related activities and financial services, both of which were drivers of the sequential jump in the advance estimates."