January 26, 2018 / 5:00 AM / in 7 months

UPDATE 1-Singapore Dec factory output posts biggest decline in 2 years

* Industrial production declined for the first time since July 2016: -3.9 pct y/y, -2.0 m/m

* Pharmaceuticals output fell 43.6 pct y/y

* Electronics growth moderates to +4.2 pct y/y

By Fathin Ungku

SINGAPORE, Jan 26 (Reuters) - Singapore’s factories posted their biggest on-year output decline in two years in December, driven by a slump in pharmaceuticals production while growth in the city-state’s hot electronics manufacturing slowed.

Manufacturing output in December fell for the first time in nearly 1-1/2 years at 3.9 percent from a year earlier, data from the Singapore Economic Development Board showed on Friday. The median forecast in a Reuters survey predicted a 0.5 percent expansion.

On a month-on-month and seasonally adjusted basis, industrial production fell 2.0 percent in December. The median forecast was for a rise of 1.5 percent.

The unexpected decline in December was largely attributed to a year-on-year 43.6 percent contraction in pharmaceuticals output, a sector known for its volatility due to large variations in the size of export batches.

“It seems to be a general, regional picture that there’s weakness in the December period in terms of exports and production,” said Credit Suisse economist, Michael Wan, adding that the weakness is likely to be temporary.

Singapore’s manufacturing data comes a week after the city-state announced that export growth slowed more than expected in December from a year earlier due to a fall in electronics trade and the first decline in shipments to China in more than a year.

“Things like metal prices have started to pick up, commodity prices are starting to do better, which we think will bode well for regional exports,” Wan told Reuters.

Singapore, along with other trade-reliant economies in Asia have enjoyed a boost in 2017 from an improvement in global demand, particularly for electronics products and components such as semiconductors.

Electronics output in December grew 4.2 percent from the year earlier, moderating significantly from months of double digit growth.

Analysts say that the base effects of stellar growth of electronics last year will also be seen in year-on-year growth numbers, which are likely to moderate in 2018.

In November, Singapore’s industrial production rose a revised 5.6 percent from a year earlier, prompting a downward revision of the city-state’s fourth quarter GDP. (Reporting by Fathin Ungku; Editing by Sam Holmes)

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