SINGAPORE'S manufacturing sector recorded a better than expected 7.5 per cent contraction in November boosted by a rebound in the highly volatile pharmaceutical sector.

But factory output has still contracted for the second straight month following a 12.1 per cent dip in October, the Economic Development Board said, as output across all segments except for the biomedical sector either contracted or performed worse than in October.

The overall performance may have been much better than the 16.1 per cent dip economists had predicted, but worrying to them is that factory output still contracted in spite of biomedical sector's 14.9 per cent expansion they say.

Citigroup economist Kit Wei Zheng said that together with the weak services data, Singapore's fourth quarter GDP may well have contracted by 8.6 per cent from the previous quarter, for its third straight quarter of negative growth.

This would bring Singapore's full year growth to 1.7 per cent - well below the Government's estimated 2.5 per cent figure.

From January through November, factory output has now shrunk 3.3 per cent over the same period last year.

Last month's factory output rose 6.2 per cent over October, seasonally adjusted, due to increased production in the biomedical manufacturing cluster the EDB said.

The biomedical sector expanded 14.9 per cent from the year before on the back of 17.5 per cent growth in pharmaceuticals due to a change in the mix of active pharmaceutical ingredients produced here.

But the biomedical sector has now shrunk 9.2 per cent for the eleven months to November over last year.

Transport engineering, the other bright spot, grew 5.2 per cent in November boosted by an 8.3 expansion in the aerospace segment from deliveries on contracts secured earlier in the year, and a low level of production last November. But this was less than October's 11.7 per cent rise.

The dismal performance by the electronics sector continued as it fell 19.4 per cent for a fourth straight month of decline as all segments from chips to cellphones saw lower production due to a fall in global demand.

But economists have noted that the once important sector is undergoing a structural change as companies have shifted their production facilities to lower cost areas in the region.

Electronics output has now shrunk 3.7 per cent from January through November compared to last year.

Output from the precision engineering cluster shrank 19.1 per cent and the chemicals cluster contracted 20.1 per cent in November.