Month-on-month and after seasonal adjustments, factory output was probably flat in August following a 9.1 percent drop in July when pharmaceutical production fell sharply, according to seven of the 13 economists polled for the forecast.

Manufacturing accounts for about a quarter of Singapore's gross domestic product, which contracted 0.7 percent quarter-on-quarter in the April-June period on an annualised and seasonally adjusted rate as both manufacturing and services slowed.

A weak August industrial production number will raise fears of a second straight quarterly contraction in July-September that will push Singapore into a technical recession and increase pressure on the central bank to ease monetary policy next month.

Bank of America Merrill Lynch economist Chua Hak Bin, who expects a contraction in electronics output because of weak demand abroad, said the island's industrial production was probably near-stagnant in August compared with July.

 "A poor IP (industrial production) reading increases the risk of a technical recession," he said.

Singapore's non-oil domestic exports fell by a more-than-expected 9.1 percent in August from July after seasonal adjustments as exports to the European Union plunged.

 The city-state's Purchasing Manager's Index (PMI) also pointed to a contraction in manufacturing, staying below the 50-point level for a second straight month in August.

 Inflation, however, eased further in August after coming in at elevated levels over the past year, giving the central bank leeway to ease policy by slowing the appreciation of the Singapore dollar.

 "We are not expecting any meaningful pickup in activity until either the US or China register strong improvements," said ANZ economist Vincent Conti. "Recent policy measures taken by these countries' policymakers will help, but will take some time to filter through to the Singapore economy."

 

(Source: Reuters)