Singapore’s manufacturing sector broke its 10-month growth streak in September with a 3.4% contraction, no thanks to a shrinkage in the output of the biomedical segment.

The latest showing is a turnaround from August’s 11% expansion, and is more severe than the median decline of 0.9% forecast by private-sector analysts in a Bloomberg poll.

Excluding contributions from the biomedical segment, manufacturing output widened to 9.4% y-o-y, according to data released by Singapore’s Economic Development Board (EDB), a government agency under the <a href="https://www.theedgesingapore.com/tags/ministry-trade-and-industry-mti" target="_blank">Ministry of Trade and Industry (MTI)</a>.

This comes as output from the biomedical cluster – which has been rather volatile in the past year – tumbled by 35.9% y-o-y. This is worse than the 1.7% dip seen in the month before and follows a 46.2% plunge in the pharmaceuticals segment as a different mix of active pharmaceutical ingredients were being produced compared to the year before.

<hr/>See: <a href="https://www.theedgesingapore.com/news/singapore-economy/singapores-manufacturing-output-30-y-o-y-may-low-base-2020-exceeding-analysts" target="_blank">Singapore's manufacturing output up by 30% y-o-y in May on low base in 2020, exceeding analysts' expectations</a><hr/>

A further decline in the cluster’s output was mitigated by a 2.4% increase in its medical technology segment due to sustained export demand for medical devices.

General manufacturing also printed a contraction of 2.7% in September, thanks to a 21.0% jump in its miscellaneous industries segment due to the low base in 2020 when demand for construction-related products took a hit from the Covid-19 safe management measures.

The remaining segments recorded an increase in output, with a strong push seen in the 30.2% jump in precision engineering. This follows a 38.4% surge in its machinery & systems segment due to higher output of semiconductor and industrial process equipment.

A further lift came from a 13.5% rise in the precision modules & components segment, which saw higher production of optical products, plastic and metal precision components as well as dies, moulds, tools, jigs and fixtures.

The transport engineering segment similar saw a 12.95 expansion in output. This was led by expansions to the aerospace (21.7%) and marine & offshore engineering (9.9%) segments as the order intake picked up from an easing of travel restrictions and an improvement in the oil & gas market.

In the same vein, the chemicals sector saw a 12.4% growth in output. Expansions were seen in the petroleum (26.1%) and petrochemicals (18.6%) segments compared to a year ago when production was weighed down by plant maintenance shutdowns and weaker export demand.

For more stories about where the money flows, <a href="https://www.theedgesingapore.com/section/capital" target="_blank">click here for our Capital section</a>

Output from the other chemicals segment rose by 9.9% on the back of higher production of fragrances while the specialties segment recorded a decline of 1.5%.

Meanwhile, output from the linchpin electronics sector edged up by 4.9% y-o-y, with all segments recording expansions except for computer peripherals & data storage.

On a seasonally adjusted, monthly basis, industrial production decreased by 2.8% in September, or 5.1% when biomedical manufacturing was excluded.

Maybank Kim Eng economists Chua Hak Bin and Lee Ju Ye say that the contraction is “likely a blip due to the exceptionally high base last year”.

“We expect manufacturing growth to return to positive territory in October, although growth will likely be in the single-digit pace as semiconductors are likely operating at near full capacity,” they observe.

Chua and Lee expect a stronger performance in the transport engineering segment as aerospace recovers amid the border reopening while the marine & offshore segment gets a lift from a stronger oil & gas market.

To this end, they are expecting 3Q2021 GDP to come in at 6.5%, with the slightly weaker-than-expected manufacturing performance being offset by a small upgrade in services.

Going forward, Chua and Lee say that consumer-facing services such as accommodation & food services and retail trade will likely take longer to normalise with the dining-in and social restrictions, despite the gradual reopening of borders in 4Q2021.

Singapore's manufacturing sector contracts in September after 10-month growth streak

US stock faithful ride US$7 trillion rally as market timing backfires

Qarbotech named winner of inaugural EQT Impact Challenge

Singapore's manufacturing sector contracts in September after 10-month growth streak

Related News

Highlights

US stock faithful ride US$7 trillion rally as market timing backfires

Related News

Singapore introduces Significant Investments Review Bill to regulate critical entities

Gan Kim Yong announces single gas buyer for power generation next year, six shortlisted for ammonia project

Singapore’s headline inflation increases to 4.1% y-o-y; core inflation eases to 3.0% in September