SINGAPORE (Dec 26): Singapore’s manufacturing output increased by 5.3% year-on-year in November, some 2.8 percentage points below economists’ expectations as pharmaceuticals output dived 31.1%.

The decline in pharmaceuticals manufacturing, which was attributed to a different product-mix being produced, dragged output for the biomedical manufacturing cluster down 23.3% from a year ago.

“We are forecasting another contraction in this cluster for December, mainly due to the very high base registered in December 2016. On-year gains in this cluster could possibly be seen then in 1H 2018,” says UOB Group economist Francis Tan in a macro note on Tuesday.

Excluding biomedical manufacturing, Singapore’s total manufacturing output would have grown 13.9% in November.

On a seasonally adjusted month-on-month basis, total manufacturing output fell 2.3% in November, compared to the preceding month.

The electronics cluster saw the biggest improvement in November, with output expanding 27.6%. This was led by the semiconductors, computer peripherals, and infocomms & consumer electronics segments, which posted growth of 36.4%, 20.7%, and 16.2%, respectively.

“With the global tech sector expected to sustain some momentum, Singapore’s electronics cluster is likely to continue to register firm growth in the next few months,” says Tan.

The precision engineering cluster grew 19.9% in November, on the back of higher production in the precision modules & components segment, which posted robust growth of 44.6%.

Meanwhile, the transport engineering cluster’s output decreased 8.3% year-on-year in November, despite a 33.2% growth in the aerospace segment with more repair and maintenance jobs from commercial airlines.

The cluster was dragged down by declines in the land transport and marine & offshore engineering segments, which fell 19.9% and 31.9%, respectively.

“It is without doubt that another month of strong production numbers in November continues the optimism surrounding the recovery story in Singapore’s manufacturing industries,” says Tan.

However, he cautions that observers should not be “overly optimistic”.

“Although the growth in the manufacturing sector has become more broad-based, the growth rate in the semiconductor segment may be slower due to the high base effects of 2017,” he adds.