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Prakash Sakpal, Economist at ING, Singapore’s August manufacturing surprised on the downside with 3.3% year on year growth, undershooting the consensus estimate of 4.7%.

Key Quotes

“The third consecutive month of a slowdown in manufacturing output in August suggests Singapore’s GDP growth is poised for another quarterly slowdown in 3Q18. We think it ‘ll drag growth under 3% in 3Q18 from 3.9% in 2Q18.”

“The slowdown from a 6.7% YoY growth in July, which was revised up from 6.0% initial estimate, was pretty much consistent across most sectors. In a continued clawback of an outsized 4.5% month-on-month (seasonally adjusted) bounce in June, August’s 2% MoM decline followed the 1.2% decline in July. With over 40% combined weight in the total, electronics and pharma were the main drags on the headline growth in August.”

“On a monthly basis, September is a weak growth month. Assuming a monthly manufacturing change, in September, the average rate over the last three years, quarterly growth will have more than halved to 4.7% YoY in 3Q18 from 10.6% in 2Q. This will certainly be associated with a slowdown in GDP growth.”