Singapore industrial production tumbles

Bloomberg News Service

SINGAPORE — Singapore's industrial production posted its biggest drop in June as electronics factories cut back in response to flagging exports.

Industrial production, which accounts for a quarter of the Singapore economy, fell 16.1 percent from a year earlier after dropping a revised 10.6 percent in May, the Economic Development Board said.

Producers are scaling back as exports of electronics and other goods decline, cutting economic growth. The economy shrank 10.1 percent in the second quarter, putting Singapore into recession, the government said.

"Demand for electronics will be soft for the whole year," said C.P. Goh, chief executive of Beyonics Technology Ltd., a maker of printed circuit assemblies, plates embedded with chips and other electrical components.

Factories for chipmakers such as STMicroelectronics NV were shut down in June, and several companies have announced layoffs or forced holidays. The government announced a $1.2 billion package last month to soften the blow.

As a result of weakness in factory production, manufacturing may dip 9.6 percent this year, reversing a 15.2 percent gain last year, according to Tan Khee Giap, an economist at Singapore's Nanyang Technology University.

"These are trying times for the Singapore economy," the Singapore Confederation of Industries, which groups 1,200 manufacturers, said in a statement. "We urge the government to institute more measures to effect a quick and sustainable recovery."

In June, production in the electronics industry, which makes up half the island's manufacturing, plunged 26 percent from a year earlier, compared with May's 19.6 percent slump and April's 8 percent decline.

"Sluggish demand from the U.S. pressed down the output of hard disk drives," the Economic Development Board said in a statement. "The waning demand for mobile phones caused the telecommunications equipment industry to decrease its output further."

Chemicals, which account for 11 percent of the total, dropped 7.4 percent from a year earlier, compared with a 1.2 percent decline in May and a 0.8 percent gain in April.

Production of machinery and other related goods, which accounts for one-fifth of total production, contracted 10.2 percent. In May, such production shrank 3.1 percent after falling 2.2 percent in April.

Pharmaceuticals and medical devices, which account for 13 percent of overall production, dipped 1 percent, compared with a 5.1 percent drop in the previous month.