While some manufacturing segments are benefiting from the improving global economy, the outlook for Singapore remains cautious, the Monetary Authority of Singapore (MAS) said yesterday.
It noted in its Macroeconomic Review that growth has been "volatile and uneven" while unemployment could inch up this year amid soft labour demand.
The latest biannual report contains the central bank's take on Singapore's economic performance and outlook since the last review in October last year.
Trade-related sectors have enjoyed a significant turnaround that started in the fourth quarter of last year, underpinned by a rebound in manufacturing, the MAS noted.
This was driven largely by a resurgence in global chip demand, which has boosted semiconductor manufacturing here.
Firmer manufacturing activity, in turn, has had positive spillovers on trade-related services such as air and sea cargo handling.
However, the recovery in the rest of manufacturing is likely to remain patchy, the MAS said. For instance, segments like marine and offshore engineering still face challenges.
In addition, industries relying mainly on local demand will continue to see lacklustre growth.
The report also noted that employment growth is expected to remain uneven this year, with stronger demand in sectors like education and healthcare, but weaker in manufacturing and construction.
"Amid soft labour demand, the overall and resident unemployment rates may increase slightly this year," the MAS added.
Economists said there are tentative signs emerging of a turnaround in the global economic cycle, but remained cautious about the outlook for Singapore.
The country is grappling with longer-term structural challenges that could still weigh on growth, they noted.
"While the headline data is showing some signs of a turnaround, labour market numbers will probably make for more sombre reading," said CIMB economist Song Seng Wun.
OCBC economist Selena Ling noted that growth and inflation numbers have been gradually ticking up but "below the surface there's a fair bit of choppiness".
"The labour market is seeing fairly uneven demand and supply conditions; some sectors are still hiring but job creation numbers on the whole have flatlined," she said.
Even if the pickup in global growth persists and eventually lifts the rest of Singapore's economy, it could take longer for the job outlook to improve, said DBS economist Irvin Seah.
"The economy is still undergoing restructuring. In this period of transition, the local workforce will have to continue to try to adapt by moving to new types of jobs and picking up new skills," he added.
Mr Willy Koh, founder of Racer Technology, said sales were lacklustre last year but have gradually started to improve. The precision engineering firm manufactures medical devices.
Sales have grown at an average of about 5 per cent to 8 per cent month-on-month this year, he said.
"The medical sector tends to be less volatile so the increase has been gradual. But this year does seem to be better," added Mr Koh.