A surge in biomedical manufacturing helped cushion the fall in factory output last month, raising hopes that economic growth could be lifted for the first three months of the year.

Factory output slid 0.5 per cent last month from March last year, performing better than the 2 per cent fall analysts had earlier forecasted.

Contractions in the transport engineering, precision engineering and chemicals clusters led last month's slide in output, but this was cushioned by a 23.1 per cent surge in biomedical manufacturing.

Excluding output from the volatile biomedical cluster, total output was down 5.5 per cent, fresh data from the Economic Development Board (EDB) showed yesterday.

With the March data now in, the manufacturing sector contracted just 1 per cent in the first three months of 2016 from a year earlier, beating the Ministry of Trade and Industry's (MTI) flash estimate for a 2 per cent cent contraction.

This means that barring output revisions in the services and construction sectors, the Singapore economy ought to have grown 2 per cent in the first quarter, better than the MTI's early estimate for 1.8 per cent growth, economists said.

But no one is breaking out the champagne just yet.

"It is premature to declare this glimmer a dawn," said Mizuho economist Vishnu Varathan, noting that Singapore remains mired in a manufacturing recession.

Factory output shrank for 12 of the past 13 months, rising only in January by 1.1 per cent year on year.

"Crucially, bellwethers such as South Korean exports as well as global manufacturing PMI (purchasing managers' index) slippage in April suggest that global demand (remains weak)," Mr Varathan said.

Big pharma cannot be counted on to lead manufacturing activity out of a slump, said DBS economist Irvin Seah.

The pharma industry, which surged 27.9 per cent last month, drove the jump in biomedical manufacturing. But those factories are prone to wild swings from month to month, based on where they are in the drug production cycle.

Most drugmakers here produce active pharmaceutical ingredients (APIs), and can churn out only one batch of APIs at a time, said Mr Seah. "When they change their product mix, they have to shut down their plants for sterilisation for about a month."

On the flip side, API orders tend to be huge, so when the plants run, they run at full capacity, he said.

But while growth was uneven across the six manufacturing clusters last month, it was "relatively better" than previous months where more clusters shrank than grew, noted UOB economist Francis Tan.

Electronics production rose 5.8 per cent in March from a year ago on higher semiconductor output, after falling 4.4 per cent in February.

The general manufacturing cluster grew 0.9 per cent, after falling 2.1 per cent in February.

Even so, Mr Eng Keng Liang, director of LNE Precision Engineering, said his electronics business is much weaker than his medical devices business.

"But I think we should be okay. We have projects until July."