A decline in the manufacturing sector caused Singapore's economy to contract in the first three months of the year, underperforming economists' expectations.

The economy shrank 0.6 per cent from the first quarter a year ago, and 1.4 per cent from the fourth quarter in 2012, according to advance estimates from the Ministry of Trade and Industry (MTI) on Friday.

Economists polled by Reuters had expected the economy to grow by 0.2 per cent from a year ago and 0.7 per cent from the last three months of 2012.

MTI said the poor performance was due to factories producing less output. The manufacturing sector, which makes up about a quarter of the economy, shrank 6.5 per cent in the first quarter of the year compared with the same quarter a year ago, and 11.3 per cent on a quarter-on-quarter basis.

Services firms, which account for two-thirds of the economy, grew 1.2 per cent in the first quarter compared with a year ago, and 1.8 per cent compared with the last quarter of 2012.

The construction sector performed the best in the first quarter of 2013, growing 7 per cent year-on-year and 15.1 per cent quarter-on-quarter, due to a rebound in private-sector building activities, MTI said.