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SCMP Reporter

Manufacturing output in the trade-dependent city-state grew 18.9 per cent last month compared with a year earlier, according to data released yesterday.

The increase - the third consecutive monthly improvement - will bolster hopes that the economy is continuing to gather steam following last year's recession.

The Economic Development Board, which co-ordinates industrial policy, said the jump was supported by strong growth in the chemicals and biomedical science sectors, which expanded 24.1 per cent and 137.6 per cent.

The market had predicted that manufacturing output would increase by about 8 per cent on the year following a 17 per cent rise in May and as exports mended.

The critical electronics sector - which accounts for 60 per cent of non-oil domestic exports - grew at the much slower rate of 2.1 per cent year on year.

'Prices of chips remained weak,' the board said.

Over the first half of this year, Singapore's manufacturing output grew 4.7 per cent compared with the January to June period last year.

'Most clusters also registered higher output [over the half] except the electronics cluster, which still recorded negative growth,' it said.

Manufacturing accounts for about a quarter of gross domestic product.

The monthly output figures are regarded as a reliable barometer of the economy's health.

Yesterday's data matched the second-quarter macro-economic assessment from the Ministry of Trade and Industry which said that while growth was picking up it was uneven, heavily skewed towards chemicals and biomedicine.

According to a preliminary GDP estimate released earlier this month, Singapore's economy grew 3.2 per cent year on year in the April to June period.

But the ministry noted that 'the substantial improvement can be attributed to an exceptional surge in the chemicals cluster, whose quarterly performances are typically volatile'.

The government has forecast that GDP will expand between 2 per cent and 4 per cent this year, a view that has been endorsed by the Monetary Authority of Singapore, the central bank.

'Against the backdrop of a more favourable external environment, the support provided by domestic macro-economic policies, as well as the strong recovery momentum [this year] GDP growth for 2002 is likely to come in at the upper half of the 2 to 4 per cent range,' the authority said in its mid-year review.

Last year, rocked by a collapse in external demand, especially in the high-technology sector, GDP slipped 2 per cent.

It was the worst performance since 1964.

Economists noted Singapore's growth depended on external demand, especially in the United States, the world's largest economy.

Should the US recovery falter in the second half, Singapore's economy would slow, they said.

Singapore's leaders have played up recent indications that the economy is on the mend in an apparent bid to lift people's post-recession blues.



Increased industrial output bolsters sentiment