Singapore’s manufacturing output expanded by 16.4% y-o-y in February, following expansions across sectors such as electronics and biomedical manufacturing.
Excluding biomedical manufacturing, the increase in output narrowed to 13.6%, according to data released by Singapore’s Economic Development Board (EDB), a government agency under the Ministry of Trade and Industry (MTI).
February’s showing is an improvement from the 8.6% y-o-y increase registered in the previous month.
A substantial lift came from a 30.3% surge in output from the linchpin electronics sector. This was led by a 36.5% increase in the output from the semiconductor segment, thanks to demand from 5G markets and the low production base a year ago.
The sector had also benefitted from a 5.7% increase in the output from its infocomms & consumer electronics segment.
Output from the biomedical manufacturing similarly expanded by 23.9% in February. This comes from a 16.7% growth in pharmaceuticals output due to higher output of active pharmaceutical ingredients.
A boost also came from a 12.6% rise in the output from the medical technology segment which follows higher export demand for medical devices.
The precision engineering sector followed suit with a 15% increase in output. EDB attributes this to a 23.5% growth in its machinery & systems segment which was supported by robust demand for semiconductor equipment.
A further lift was mitigated by a 4.5% decline in the output from the precision modules & components segment which had been dragged by lower production of dies, moulds, tools, jigs and fixtures.
In the same regard, output from the chemicals sector was up by 2.5%, with a substantial push coming from the performance of the specialties (+8.7%) and petrochemicals (+6.1%) segments.
The former had benefitted from higher production of industrial gases and additives while the latter grew from a low base in 2020.
Still the chemicals sectors overall performance was compromised by declines in the chemicals (-3.3%) and petroleum (-25.3%) segments.
Meanwhile, the output in the other clusters came in the red in February, with transport engineering registering the biggest y-o-y contraction of 24.2%.
This was led by declines to the marine and offshore engineering (-23.0%) and aerospace (-32.1%) segments as the order intake took a hit from the weak global oil and gas market as well as the travel restrictions imposed to curb the spread of coronavirus infections.
A further contraction in the cluster was mitigated by a 20.3% growth to its land segment that benefitted from higher output of parts and accessories for motor vehicles.
Output from general manufacturing similarly inched down by 5.5% due to the lunar new year holidays.
This follows a 6.7% decline in its food, beverage & tobacco segment which was affected by lower production of milk powder products. Printing output was also down by 24.7% in February.
By contrast, output from its miscellaneous industries segment was up by 2.5% due to higher production of wearing apparel and batteries.
Overall, on a seasonally adjusted m-o-m basis, output from Singapore’s manufacturing was up by 1.6% in February. Excluding the biomedical sector, this number narrowed to 0.1%.
“Manufacturing will likely stay healthy in the first half of the year, driven by strong demand for chips and the recovery in chemicals and general manufacturing from their low base last year, especially in 2Q2020,” reckon Maybank Kim Eng economists Chua Hak Bin and Lee Ju Ye.
“The pace will likely moderate in the second half given tighter supply capacity limits and the high base effect for electronics,” they add.
UOB economist Barnabas Gan too foresees further growth in the electronics sector.
“This is on the back of the gain in global semiconductor-related demand, amid the increase in digital solutions adoption (such as 5G technology and cloud computing) around the world,” he explains.
With February’s industrial production coming in better-than-expected, Gan is expecting the manufacturing sector to grow by 5.5% this year. This is up from his previous 3% y-o-y growth forecast.
With this, he is pencilling a 0.8% y-o-y growth in Singapore’s economy in 1Q2020 ending in March.
For the full year, he is expecting growth to come in at 5.5%, up from his previous 5% prediction.