SINGAPORE - Singapore's manufacturing output continued its upward trend for the sixth straight month in April, supported by strong performance in the precision engineering and chemicals clusters.
Production increased 2.1 per cent year on year, according to data released by the Economic Development Board (EDB) on Tuesday (May 25).
This was lower than the 3.5 per cent growth forecast by economists in a Bloomberg poll and the 7.6 per cent year-on-year expansion seen in March.
Analysts pointed out that this moderation in manufacturing growth was mainly due to the plunge in the volatile pharmaceuticals segment from the high base a year ago.
Excluding biomedical manufacturing, output in April expanded 11.1 per cent as other clusters rebounded from the low base due to travel restrictions and circuit breaker measures last year.
On a month-on-month seasonally adjusted basis, overall factory output increased 1 per cent. However, excluding the volatile biomedical manufacturing segment, output declined 0.6 per cent.
The precision engineering cluster was a key driver of growth, increasing 20.4 per cent year on year in April, supported by higher production of semiconductor equipment due to strong capital investment in the global chips industry.
Chemicals production rose 14.4 per cent year on year, with expansion in the petrochemicals and specialities segment outweighing the decline seen in the other chemicals and petroleum segments.
Electronics output also expanded 6.1 per cent in April, with all segments recording higher levels of production.
UOB economist Barnabas Gan said the electronics and precision engineering clusters are expected to support the overall manufacturing sector on the back of global growth and a positive external environment.
Quicker-than-expected roll-out of Covid-19 vaccines could accelerate recovery to pre-pandemic levels, but uncertainties around the pandemic given new variants of Covid-19 around the world could also provide downside risks, he said.
Transport engineering saw growth in April from a low base a year ago, with the land and aerospace segments rising. However, continued low activity in the shipyards weighed on the marine and offshore engineering segment, which contracted 5.9 per cent year on year. On a year-to-date basis, the transport engineering cluster fell 13.2 per cent compared with the same four-month period in 2020.
A low base last year due to circuit breaker measures also contributed to the 18 per cent rise in general manufacturing output in April. A gradual pickup in domestic demand for construction-related products also supported expanded production in miscellaneous industries.
However, the biomedical manufacturing cluster declined by 22.7 per cent from a year ago despite growth in the medical technology segment due to higher export demand for medical devices. The pharmaceuticals segment declined 24.7 per cent due to demand for a different mix of active pharmaceutical ingredients, EDB said.
Maybank Kim Eng analysts Chua Hak Bin and Lee Ju Ye pointed out that this plunge in biomedical manufacturing was from a high base last year. The cluster’s output expanded 90 per cent year on year in April 2020.
“We expect manufacturing growth to strengthen in May and June, and remain positive on a year-on-year basis given the low base last year, driving second-quarter gross domestic product growth to double digits,” they said.