June 26, 2014 / 6:22 AM / 4 years ago

REFILE-UPDATE 1-Singapore May factory output hit by weak external demand

(Corrects misspelling of ANZ in third last paragraph)

* Singapore May output -2.5 pct y/y vs +2.6 pct f’cast

* Singapore May output -5.7 pct m/m vs -0.2 pct f’cast

* Weak pharmaceuticals, electronics hurt output

SINGAPORE, June 26 (Reuters) - Singapore’s May manufacturing output contracted at its worst annual pace in 11 months, government data showed, underscoring recent weakness in exports that pointed to feeble external demand.

The disappointing output data comes after Singapore’s exports unexpectedly fell in May on weak shipments of electronics and pharmaceuticals to its key markets.

“It will eventually benefit (from a recovery in major economies),” said Francis Tan, an economist for United Overseas Bank. However, “I am not so sure how many months it would take.”

Industrial output in May fell 2.5 percent from a year earlier, Singapore Economic Development Board said in a statement on Thursday.

That was the largest slide since a 4.7 percent loss in June last year and defied market forecasts of a 2.6 percent rise in a Reuters poll.

On a seasonally adjusted month-on-month basis, factory output in May slid 5.7 percent, far worse than a forecast 0.2 percent decline.

Weakness in Singapore’s factory output of pharmaceuticals and electronics contributed to the overall decline in May, reflecting recent softness in external demand.

Exports to major economies, especially Europe, have been weak in recent months, hobbling the economic recovery in the city-state.

Pharmaceuticals output in May fell 11.6 percent from a year earlier after growing 26.7 percent in April. Electronics production also slid 7.5 percent from a year ago with semiconductor output down 6.4 percent.

“Without pharma offsetting, we will likely see the electronics drag the overall industrial production to fall,” said Daniel Wilson, an economist for ANZ in Singapore.

Output of electronics in April suffered a 7.6 percent loss from a year earlier.

In 2013, the manufacturing sector made up roughly 19 percent of Singapore’s economy. Electronics accounts for 30 percent of total manufacturing activity, while biomedical manufacturing makes up 20 percent.

Reporting by Jongwoo Cheon and Rujun Shen; Editing by Shri Navaratnam

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