Singapore’s factory output growth slows again as end-date for Trump’s tariff reprieve nears

SINGAPORE - Singapore’s factory output grew at a slower pace for a second straight month in May as a tariff-induced front-loading of exports continued to taper off.

The world economy is now just about two weeks away from the July 9 expiration of

US President Donald Trump’s global tariff reprieve

and the uncertainty of what trade deals will finally follow.

Factory output rose 3.9 per cent year on year,

after a revised 5.6 per cent rise in April

, which was a slowdown from March’s 6.9 per cent expansion.

Still, May’s reading surpassed the 2.2 per cent growth forecast by economists in a Bloomberg poll.

Excluding the more volatile biomedical industry, factory output increased 4.9 per cent, data from the Economic Development Board on June 26 showed. 

In a more telling indication of slowing momentum, manufacturing output fell month on month, slipping 0.4 per cent from April, after seasonal adjustments. Excluding biomedical production, output increased 0.7 per cent.

The United States announced a 90-day suspension of global reciprocal tariffs, excluding China, on April 9. The same reprieve was extended to electronics on April 12. The US and China subsequently announced on May 12

a deal to slash tariffs

, which would also last 90 days.

Singapore’s key exports saw a 12.4 per cent year-on-year jump which economists credited to front-loading as exporters accelerated shipments to take advantage of the pause in reciprocal tariffs before potential further duties. But in May, key exports fell 3.5 per cent as front-loading cooled.

DBS Bank senior economist Chua Han Teng said that the second half of 2025 could see a slowdown in manufacturing growth.

“The front-loading of exports orders in first half of 2025 will eventually be followed by a payback through decelerating trade and industrial production that would materialise in the second half,” said Mr Chua.

As a result, DBS Bank is cautious on the outlook for the second half as manufacturers’ sentiment in Singapore remains subdued, as seen in the contraction in the manufacturing purchasing managers’ index in May.

“Significant uncertainty persists regarding ongoing US tariff negotiations, and higher global trade frictions compared with pre-Trump 2.0 will be negative for Singapore’s external demand prospects,” said Mr Chua.

Maybank economist Brian Lee said the manufacturing sector remains resilient, with production holding up better than key exports. Non-oil domestic exports contracted 3.5 per cent year on year in May, whereas factory output growth stayed resilient at a respectable 3.9 per cent increase.

In the key electronics sector, output grew 3.9 per cent year on year in May, down sharply from the 14.6 per cent growth seen in April.

Within this cluster, semiconductor production rose 3.4 per cent, slowing from the 11.1 per cent increase in April. The infocomms and consumer electronics segment grew 42.6 per cent, down from growth of 67.4 per cent in the previous month.

Computer peripherals and the data storage segment fared worse with output contracting 18.7 per cent, while production of other electronic modules and components shrank 20.8 per cent.

The biomedical manufacturing sector grew 6.1 per cent year on year in May, reversing a 1.8 per cent drop in April.

Within the biomedical industry, the pharmaceuticals segment expanded 17.9 per cent, attributed to higher production of biological products as well as a different mix of active pharmaceutical ingredients being produced as compared to a year ago.

The medical technology segment rose 3.2 per cent, on the back of sustained export demand for medical devices.

All other manufacturing industries, with one exception, saw year-on-year output growth in May.

Singapore’s electronics and biomedical manufacturing clusters remain susceptible to downside risks from US levies on semiconductor and pharmaceutical imports that could still be on the cards, said DBS’ Mr Chua.

Maybank’s Brian Lee said that precision engineering and transport engineering continue to be bright spots in Singapore’s manufacturing industry.

Precision engineering output increased 10.3 per cent in May year on year.

The machinery and systems segment expanded 12.3 per cent, led by higher production of semiconductor equipment and measuring devices.

The precision modules and components segment grew 3 per cent, thanks to higher output in the plastic precision components and electronic connectors industries.

Transport engineering output rose 25.6 per cent, led by the aerospace segment, which expanded 43.6 per cent, bolstered by higher production of aircraft parts and more maintenance, repair and overhaul jobs from commercial airlines.

The marine and offshore engineering segment increased 5.3 per cent, driven by higher levels of activity in the shipyards. Conversely, the land segment declined 12 per cent.

Chemicals output increased 0.3 per cent compared with a year ago, with most segments reporting growth. The other chemicals segment grew 3.1 per cent from higher output of fragrances, the petroleum segment expanded 2 per cent and the petrochemicals segment grew 1.1 per cent.

However, the specialties segment fell 7.1 per cent, dragged down by lower production of industrial gases, biofuels and food additives.

General manufacturing output dropped 8.9 per cent, as most of the segments recorded output declines.

While the printing segment grew 2.2 per cent, the food, beverages and tobacco segment declined 4.5 per cent with lower production of beverage concentrates and bakery products.

The miscellaneous industries segment also contracted, by 16.6 per cent, mainly due to lower output of structural metal components and products as well as paper and paperboard containers and boxes.