AWSJ - Unusual large swings in SG govt data

[Sammyboy RSS Feed]

An honorable member of the Coffee Shop Has Just Posted the Following:

The city-state’s gross domestic product rose 6.1% on an annualized, seasonally adjusted basis in the fourth quarter, far above the 2.7% on-quarter contraction estimated in January. Stronger December data changed the picture, apparently.

“The advance estimate has somewhat lost its relevance given that it is always subjected to massive revisions,” DBS Bank economist Irvin Seah said.

Uncertainties in Singapore data aren’t unusual: The government’s advance estimates use available data from the first two months of a quarter and extrapolate the third. An unexpected manufacturing rebound in December, and a helping hand from the services sector, caused the unusually steep revision this time.

The revised data will help inform the government’s 2014 budget, which will be presented Friday.

“It seems certain that the government will avoid using fiscal policy to stimulate the economy, given the healthy outlook,” Capital Economics said in a research note.

Industrial production grew 5% on-month in December, leading to a revision in the manufacturing component of GDP to 7.0% on-year growth. That compares with 3.5% growth estimated in January, Credit Suisse economist Michael Wan said.

Service-sector growth quarter was revised to 5.9% on-year in the fourth quarter, from 5.5% previously. Construction was revised slightly upward to 4.8% on-year.

“What surprises is the pickup in the services sector,“ said Euben Paracuelles, an economist with Nomura Holdings in Singapore. Services have a bigger share in GDP than manufacturing, so their revision will have a bigger impact as well, he said.

Year over year, Singapore’s economy grew 5.5% in the fourth quarter of 2013, compared with the previous estimate of 4.4% growth. That was down slightly from 5.8% on-year growth in the third quarter.

The government revised its estimate for full-year 2013 growth to 4.1% from the 3.7% it reported in January. It maintained its previous forecast of 2%-4% growth for this year.

Speaking at a press conference after the data were released, officials sounded a note of caution. In the U.S., uncertainties remain about how quickly the Federal Reserve will taper its bond buying program, and there are risks of a sharper-than-expected slowdown in China.

“Against this backdrop, the Singapore economy is expected to post modest growth in 2014,” said Ow Foong Pheng, permanent secretary at the Ministry of Trade and Industry. She said manufacturing and trade are likely to continue to gain strength in tandem with a recovery in global demand.

However, tightness in the local labor market could weigh on the economy. Singapore has been making it more difficult for local companies to hire cheap foreign labor as part of a restructuring effort.

Despite a pickup in growth – which could be expected to boost exporting economies like Singapore’s — “the guidance is still pretty subdued,” Nomura’s Mr. Paracuelles said. He expects the economy to grow 3.5% this year.

Credit Suisse said it was keeping its forecast of 4.0% growth for the year. Mr. Wan predicted that the stronger growth and tight labor market are likely to push up inflation.

The Monetary Authority of Singapore has in recent years kept a tight monetary policy stance by letting the local currency, its primary policy tool, rise against a basket of currencies of key trading partners.

The central bank will review its monetary policy in April. Economists expect the MAS to keep policy tight to keep inflation in check – especially now that there’s less concern that the economy is losing steam.

AWSJ


Click here to view the whole thread at www.sammyboy.com.