Factory output began the year on a slightly firmer footing, falling just 0.5 per cent last month from the same period a year ago due mainly to a stronger biomedical cluster.
While January's reading marks the manufacturing sector's 12th straight month of contraction, it was far better than the 5.1 per cent contraction predicted by economists in a Bloomberg poll.
Excluding output from the volatile biomedical sector - which surged 28.9 per cent in January after relatively flat growth in the previous two months - industrial output was down 7 per cent.
But this was still a vast improvement from December's 13.8 per cent contraction, fresh data from the Economic Development Board (EDB) showed yesterday.
OCBC economist Selena Ling said: "We still anticipate the manufacturing sector to remain in the doldrums this year, but January was a commendable start. The question is whether it will sustain for the rest of the quarter, albeit the biomedical cluster could be a silver lining."
Yesterday's data also revised December's contraction to a deeper 11.9 per cent from the earlier estimate of a 7.9 per cent decline, although that was partially due to the EDB changing the base year of the industrial production index to 2015.
Previously, 2011 was used as the base year. The EDB made the change to reflect the changing structure of Singapore's manufacturing sector.
The rebased index reduces the weightage of the electronics cluster, while increasing the weight of the biomedical cluster.
Electronics production rose 1.7 per cent in January from a year earlier as a rebound in semiconductors and higher output of other electronic modules and components made up for declines in all other electronics segments. The strong biomedical output growth was due to a 34.3 per cent jump in pharmaceutical output, which is volatile, and a 10.8 per cent expansion in medical technology production.