1.3% dip in Singapore factory output in February despite high growth expectations

SINGAPORE -  Factory production in Singapore fell in February, breaking a seven-month rising streak, after the biomedical and electronics clusters contracted year on year.

Total output decreased by 1.3 per cent year on year, after a revised 8 per cent increase in January and a 5.9 per cent rise last December.

This was lower than the forecast growth of 7 per cent, according to economists polled by Bloomberg.

Excluding the more volatile biomedical industry, output increased by 0.3 per cent, according to data from the Economic Development Board on March 26.

On a seasonally adjusted month-on-month basis, total manufacturing output decreased by 7.5 per cent. Excluding biomedical manufacturing, output decreased by 7.9 per cent.

Precision engineering output grew the most, rising by 16.2 per cent in February year on year. Both of its segments registered output growth.

The precision modules and components segment expanded by 20.2 per cent, led by higher output of plastic and metal precision components, dies, moulds, tools, jigs and fixtures and optical instruments.

The machinery and systems segment increased by 14.5 per cent, on account of higher production of semiconductor equipment and measuring devices.

On a year-to-date basis, output of the precision engineering cluster increased by 0.8 per cent over the same period a year ago.

Transport engineering output grew by 16 per cent year on year in February. Within the cluster, the aerospace segment increased by 18.3 per cent, bolstered by higher production of aircraft parts and more maintenance, repair and overhaul jobs from commercial airlines.

The marine and offshore engineering segment in the same cluster expanded by 17 per cent, on account of higher levels of activities in the shipyards. But the land segment declined by 2.6 per cent. Overall, the transport engineering cluster increased by 10.4 per cent in the first two months of 2025 compared with the same period in 2024.

The chemicals cluster output decreased by 0.1 per cent in February year on year.

The other chemicals and petroleum segments grew by 4.6 per cent and 1.4 per cent, respectively, with the former supported by higher output of fragrances used in consumer products.

Experiencing a decline were the petrochemicals segment (down by 3.3 per cent) and the specialities segments (down by 6.5 per cent), with the latter recording lower production of chemical additives for industrial uses as well as biofuels.

Overall, output for the chemicals cluster declined by 1.1 per cent in the first two months of 2025 over the same period in 2024.

Biomedical manufacturing output contracted by 14.3 per cent year on year in February. The medical technology segment expanded by 12.4 per cent with sustained export demand for medical devices.

Conversely, the pharmaceuticals segment declined by 30 per cent due to a different mix of active pharmaceutical ingredients being produced and lower production of biological products compared with a year ago.

Cumulatively, output of the biomedical manufacturing cluster grew by 1.9 per cent in the first two months of 2025, compared with the same period a year ago.

Singapore’s export-oriented factories face rising downside risks from a more uncertain external landscape amid US-led tariff threats that might result in a global tit-for-tat trade war, said DBS Bank economist Chua Han Teng.

“Even as Singapore faces limited direct risks from US tariffs such as the reciprocal tariffs that are set to be announced in early April, its small and open economy remains highly indirectly vulnerable to a potential global economic slowdown induced by rising global protectionism,” he said.

While those external uncertainties have not subsided, it is still possible to see industrial production in March rebound into positive territory, said OCBC Bank’s chief economist Selena Ling. 

Should tariffs and trade tensions continue to escalate, manufacturing activity could be depressed, owing to the effects of weaker global demand, said UOB associate economist Jester Koh.

Ms Ling said: “At this juncture, given the fluidity of the tariff situation and that Asean, including Singapore, is not the initial target for US tariffs yet, we keep our 2025 industrial output growth forecast of 2.7 per cent year on year.”