Singapore factory output beats forecasts with 21% rise in August

SINGAPORE – Singapore’s manufacturing output expanded for a second consecutive month in August, driven by robust production in the electronics industry.

Total output soared by 21 per cent year on year, after an upwardly revised 2 per cent growth in July and a 4.2 per cent drop in June.

Economists in a Bloomberg poll had predicted an 8.6 per cent expansion.

Excluding the more volatile biomedical industry, production increased 27.5 per cent, data released by the Economic Development Board showed on Sept 26.

On a seasonally adjusted month-on-month basis, manufacturing output increased 6.7 per cent. Excluding biomedical manufacturing, output grew 11 per cent.

The electronics industry, which accounts for nearly half of Singapore’s manufacturing production, saw output surge by 49.1 per cent year on year, after a revised 2.9 per cent jump in July.

Within the cluster, semiconductors jumped 54.6 per cent. Other electronic modules and components rose 21.5 per cent, while computer peripherals and data storage grew 18.4 per cent, and infocomms and consumer electronics added 28.6 per cent.

DBS Bank economist Chua Han Teng noted that the expansion in electronics production was the largest since 2017.

“Singapore’s electronics firms are expected to capitalise on the global technology upcycle, driven by the replacement of smartphones and PCs, as well as the broadening adoption of artificial intelligence (AI) applications,” he said.

Echoing the sentiment, Maybank economist Brian Lee said: “Electronics will continue to recover and broaden... Fresh consumer electronics product cycles and new AI applications are boosting orders for memory, storage and networking chips, benefiting Singapore’s semiconductor ecosystem.”

The biomedical manufacturing industry was the worst performer in August, shrinking 16.1 per cent over the same month in 2023.

Within the cluster, the pharmaceuticals segment declined 15.7 per cent on account of a different mix of active pharmaceutical ingredients being produced compared with a year ago. The medical technology segment contracted 18.7 per cent due to lower export demand for medical devices.

Output in the transport engineering sector grew 3.9 per cent in August over the same month in 2023.

The aerospace segment led the charge, growing 11.5 per cent, sustained by strong demand for aircraft parts as well as maintenance, repair and overhaul jobs from commercial airlines. The land segment also performed well, growing 9.3 per cent.

But the marine and offshore engineering segment declined 8.7 per cent on the back of lower project milestones met.

In the precision engineering industry, output increased 7.9 per cent year on year.

The machinery and systems segment expanded 11.9 per cent with higher production of front-end semiconductor equipment. The precision modules and components segment increased 1.9 per cent, supported by higher output of plastic precision components and electronic connectors.

General manufacturing output rose 2.5 per cent in August, supported by the food, beverages and tobacco segment, which grew 4.9 per cent as a result of higher output of beverage concentrates and milk powder.

The printing segment grew 4.3 per cent, while the miscellaneous industries segment declined 1.5 per cent, due to lower production of structural metal products and paperboard containers and boxes.

The chemicals cluster saw output rise 11.1 per cent year on year, The specialities segment led the charge with an expansion of 34.2 per cent on account of higher production of mineral oil additives, food additives and industrial gases.

The petrochemicals segment grew 16 per cent on the back of a low production base in 2023 due to plant maintenance shutdowns. Other chemicals rose 4.1 per cent with higher output of fragrances, while the petroleum throughput remained largely unchanged.

DBS’ Mr Chua said resilient external demand will continue supporting the Republic’s factory growth in the months ahead.

“But a notable uncertainty that could potentially dampen Singapore’s manufacturing growth is an escalation of ongoing geopolitical conflicts that could disrupt global supply chains and negatively impact factory activity,” he said.