Singapore factory output beats forecast, growing 14.3% in Dec

The precision engineering cluster expanded by 11 per cent.
The precision engineering cluster expanded by 11 per cent.ST PHOTO: MARK CHEONG

Singapore's manufacturing sector was the silver lining of 2020, with the sector posting growth for the full year.

Factory output extended its rebound last month, notching another month of better than expected performance, with electronics driving growth.

It expanded 14.3 per cent year on year last month, according to Economic Development Board (EDB) data released yesterday.

Excluding biomedical manufacturing, output grew 19.8 per cent.

Overall, manufacturing output increased 7.3 per cent last year, compared with 2019.

The electronics cluster was the star performer, said OCBC Bank head of treasury research and strategy Selena Ling. The cluster expanded 11.9 per cent last year, compared with 2019.

"The fortuitous combination of work-from-home arrangements, accelerated adoption of digital and e-commerce platforms, and global semiconductor demand to support 5G products and solutions, amid the global lockdown period, was essentially a lifesaver (for the sector)," she noted.

Last month, electronics output expanded 41.8 per cent.

This growth was attributed to the semiconductor segment, which grew 51 per cent, as well as the computer peripherals and data storage segment, which grew 9.3 per cent.

"The semiconductor segment was supported by 5G markets and a low production base from a year ago," EDB said.

But the infocommunications and consumer electronics segment and "other electronic modules and components" segment saw output fall.

The chemicals cluster grew by 12.3 per cent year on year last month, with all segments except petroleum recording output growth.

But for the whole of last year, the chemicals cluster's output dipped by 1 per cent compared with 2019.

The precision engineering cluster expanded by 11 per cent last month, with the machinery and systems segment growing 12.6 per cent with higher output of semiconductor equipment and measuring devices.

Precision engineering output increased 10.6 per cent for the year.

General manufacturing output also grew, by 5.9 per cent, with increases in the food, beverages and tobacco segment, thanks to higher production of beverage products and milk powder.

Overall, full-year output of the general manufacturing cluster fell 11.3 per cent last year.

Meanwhile, biomedical manufacturing output fell by 13.2 per cent last month.

The medical technology segment grew 7.3 per cent with higher export demand for medical devices. But the pharmaceuticals segment fell 22.8 per cent, with lower production of biological products.

Overall, the biomedical manufacturing cluster's output still rose 23.7 per cent last year compared with 2019.

With the coronavirus pandemic, transport engineering output fell 31.5 per cent last month year on year. The land segment rose 4.2 per cent, while the marine and offshore engineering segment fell 30.8 per cent. The aerospace segment contracted 41.8 per cent.

"The level of activity in the aerospace firms and shipyards remained low as new orders were adversely impacted by travel restrictions and the weak global oil and gas market," EDB said.

Transport engineering output for last year contracted 25.7 per cent.

The future remains bright for manufacturing, experts said.

UOB economist Barnabas Gan said: "On the back of an economic recovery in 2021 amid potentially higher oil prices, we think that sectors which had previously seen a full-year contraction could revert to positive growth.

"These include transport engineering, general manufacturing and chemicals clusters.

"Singapore, being a trade-reliant economy, will also benefit from the expected recovery in the global external environment as domestic manufacturers gear up to meet the uptick in international demand."

A version of this article appeared in the print edition of The Straits Times on January 27, 2021, with the headline 'Singapore factory output beats forecast, growing 14.3% in Dec'. Subscribe