Singapore factory output jumps 16.1% in September with big pharma boost
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However, the machinery and systems segment declined, largely driven by lower production of front-end semiconductor equipment.
PHOTO: LIANHE ZAOBAO
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SINGAPORE - Singapore’s factory output made a surprisingly big rebound in September, reversing its drop in August, thanks to pharmaceuticals.
Manufacturing output jumped 16.1 per cent year on year, exceeding the forecast of analysts polled by Bloomberg who expected a rise of just 0.4 per cent.
This was also a reversal of the revised 9 per cent slide in August, after higher US tariffs on more than 90 countries took effect that month.
September’s strong performance came on the back of a surge in pharmaceutical production. Excluding biomedical manufacturing, output increased 5.4 per cent.
On a seasonally adjusted month-on-month basis, manufacturing output rose 26.3 per cent.
Analysts said this shows strong external demand and upgraded their gross domestic product (GDP) forecasts for 2025.
Maybank analysts Brian Lee and Chua Hak Bin said: “The manufacturing and trade-related services sectors are benefiting from strong external demand, which has largely been unaffected by (US President Donald) Trump’s tariff hikes.”
They added that this demand is supported by the ongoing artificial intelligence capital expenditure boom, which has “supercharged orders” for chips, servers and electronic components.
It is also helped by Singapore’s low 10 per cent baseline reciprocal tariff and significant tariff exemptions for most major semiconductor and pharmaceutical multinationals.
In August, the Ministry of Trade and Industry upgraded Singapore’s GDP growth forecast
The Maybank analysts said they are now upgrading their GDP growth forecast to 4 per cent and expect third-quarter GDP growth to be revised upwards, after a flash estimate of 2.9 per cent.
OCBC Bank chief economist Selena Ling said that despite US tariffs, Singapore’s manufacturing in 2025 might outperform its 2024 output.
“I also suspect that increasingly, firms are adjusting to recalibrate their supply chains and potentially leveraging on Singapore’s relatively lower tariffs imposed by the US, even as they negotiate with the US on lowering tariffs by pledging to onshore some production to the US,” she said.
Biomedical manufacturing output surged 45.9 per cent year on year in September.
Within this cluster, the pharmaceuticals segment expanded 55.3 per cent on account of higher production of biological products and a different mix of active pharmaceutical ingredients. The medical technology segment also grew by 4.8 per cent on the back of sustained export demand for medical devices.
Cumulatively, the biomedical manufacturing cluster rose 5.5 per cent from January to September, compared with the same period in 2024.
UOB associate economist Jester Koh said: “The surge can likely be attributed to a sudden front-loading of orders from the US following Trump’s announcements in late September to impose 100 per cent US tariffs on branded or patented pharmaceutical products
He added that pharma production could remain resilient in October given that the tariff announcements were made only in late September.
Talks between the Singapore Government and its US counterparts on a preferential tariff arrangement
“With implementation delayed, production is probably still running at an accelerated pace to fulfil front-loaded orders from the US,” he said.
Another key cluster – electronics – also saw higher output of 13.2 per cent year on year. The infocomms and consumer electronics segment soared 80.6 per cent, with higher production of server-related products.
Mr Koh said: “This may reflect secular tailwinds from global AI-driven investment demand such as data centre capacity expansion as well as the diffusion of AI technologies into consumer devices.”
Meanwhile, the other electronic modules and components increased by 20.2 per cent and the semiconductors segments edged up by 7.3 per cent. However, the computer peripherals and data storage segment contracted.
The transport engineering cluster also registered higher output, by 13.8 per cent.
This was led by the aerospace segment, which expanded 31.9 per cent, supported by higher production of aircraft parts and ongoing maintenance, repair and overhaul jobs from commercial airlines.
The marine and offshore engineering segment grew 1.1 per cent, but the land segment declined 20.8 per cent.
The chemicals cluster also saw a rise in output, by 1.2 per cent in September.
Growth was led by the petroleum segment, which grew 8.5 per cent from a low base in 2024 due to plant maintenance shutdowns.
However, this growth was partially offset by declines in other segments, such as specialities and other chemicals segments. This was due to the lower production of food additives and basic chemicals, as well as the lower output of fragrances.
In addition, the petrochemicals segment contracted 9 per cent due to plant maintenance shutdowns.
Both precision engineering and general manufacturing saw a decrease in output.
General manufacturing output contracted 4.7 per cent year on year. While the miscellaneous industries and printing segments increased, with higher output in battery, wooden furniture and metal smelting and refining industries, the food, beverages and tobacco segment contracted due to lower production of beverage and cocoa products.
Precision engineering output fell 5.9 per cent. Within this cluster, the precision modules and components segment increased, supported by higher output in plastic precision components, dies, moulds, tools, jigs and fixtures, electronic connectors and optical instruments industries.
However, the machinery and systems segment declined, largely driven by lower production of front-end semiconductor equipment.
Looking ahead, DBS senior economist Chua Han Teng cautioned that high volatility remains amid the evolving developments regarding tariffs, although the manufacturing sector performed better than feared in the third quarter.
“The electronics cluster could hold up for some time on relentless AI-related demand, until threatened US semiconductor tariffs are announced and implemented,” he said, adding that any downside impact is dependent on the eventual conditions.
He noted that attention will also be on US-China trade talks, particularly the upcoming meeting between the presidents of both countries on Oct 30.
“Should heightened US-China tariffs tensions persist, this would negatively impact Singapore’s export-oriented manufacturing sector, given its trade linkages to China’s supply chains.”
