Singapore factory output up 16.6% in January, more than expected, as electronics surge

SINGAPORE - Singapore’s manufacturing production began 2026 with a bang, notching its fifth straight month of expansion in January, led by the key electronics sector.

Total factory output rose by 16.6 per cent from the previous year, picking up from the growth of 10.9 per cent recorded in December 2025, according to data released by the Economic Development Board (EDB) on Feb 26.

The growth topped the 12.1 per cent increase expected by analysts in a Bloomberg poll.

Excluding the volatile biomedical manufacturing sector, manufacturing output rose 24.1 per cent.

The electronics sector, which accounts for more than a third of the Republic’s manufacturing output, saw production surge 44 per cent year on year.

This was led by other electronic modules and components, which saw growth of 53.3 per cent over the period. Semiconductors grew by 52 per cent, with the segment supported by strong artificial intelligence-related demand, according to EDB.

Infocomms and consumer electronics expanded 5.2 per cent, while computer peripherals and data storage contracted 6.3 per cent.

The growth in manufacturing output was “turbocharged” by the electronics sector, which expanded at its fastest pace since August 2024, said DBS Bank senior economist Chua Han Teng.

“This aligned with the acceleration in electronics domestic exports, which rose by 56.1 per cent year on year in the same month,” he said.

Maybank economist Brian Lee said electronics will likely remain a key driver of manufacturing strength over the coming months, on a sustained AI investment boom.

He added that Singapore’s critical semiconductor exports remain exempt from US tariffs.

Mr Lee also noted that many of Singapore’s trading partners are enjoying lower tariff rates of 10 per cent for the time being, after the US Supreme Court ruled that President Donald Trump’s reciprocal tariffs were unconstitutional.

He said: “Asian exporters could seize the opportunity to step up front-loading (of exports) to the US to capitalise on the temporarily lower tariff rates.

“Further front-loading will benefit Singapore’s manufacturing sector and exports.”

Biomedical manufacturing output fell 33.1 per cent, attributed largely to the contraction of 44.1 per cent in the pharmaceuticals segment, which produced fewer biological products and active pharmaceutical ingredients.

Medical technology output fell 28.1 per cent, due to softer demand for medical devices.

Meanwhile, transport engineering output grew 25.2 per cent. This was led by the aerospace sector, which saw a higher production of aircraft parts and sustained maintenance, repair and overhaul activities.

Precision engineering production rose 13.2 per cent, with growth in precision modules and components, as well as machinery and systems including semiconductor equipment.

The general manufacturing segment declined 2.6 per cent, as gains in miscellaneous industries and printing were offset by declines in food, beverages and tobacco production.

OCBC Bank chief economist Selena Ling said that while the latest data shows a broad acceleration in manufacturing output, it was measured against a low base, as the Chinese New Year holidays took place in January 2025.

Looking ahead, she expects manufacturing production to register a more moderate 5 per cent expansion in February because of Chinese New Year.

“Nevertheless, manufacturing momentum in the first quarter should remain resilient at 9.4 per cent year on year.”

She added: “Full-year manufacturing growth is likely to be 3 per cent year on year, or possibly even higher, depending on how sustained the AI boom is.”

UOB associate economist Jester Koh expects AI-related tailwinds to be sustained in at least the first half of 2026.

He said in a note that this will be underpinned by an estimated 30 per cent rise in capital expenditure by major technology firms, based on calculations in the Monetary Authority of Singapore’s January macroeconomic review.