SINGAPORE - Singapore's factory output extended a rebound that began in August, thanks to the booming pharmaceutical and electronics sectors, according to data released on Monday (Oct 26) by the Economic Development Board (EDB).
Manufacturing output surged 24.2 per cent in September, compared with the same month last year. This was the biggest year-on-year increase since December 2011, and far exceeded the 2.5 per cent increase expected by economists in a Reuters poll.
Excluding biomedical manufacturing, output grew 8.5 per cent.
Factory production in August was revised upwards to a 15.4 per cent jump, from the 13.7 per cent rise initially estimated. August marked the end of a three-month slump on the back of demand for biomedical goods, digital solutions and semiconductor equipment.
For September, biomedical manufacturing production expanded by 89.8 per cent year on year. Pharmaceutical output swelled 113.6 per cent, with higher output of active pharmaceutical ingredients and biological products; while the medical technology segment grew 15 per cent, with higher export demand for medical instruments.
On a year-to-date basis, the biomedical manufacturing cluster grew 26.6 per cent compared with the same period a year ago.
The electronics sector also posted robust growth, of 30.1 per cent, in September. This was led by the semiconductor segment, which grew 37.4 per cent, supported by demand from cloud services, data centres and the 5G market, EDB noted.
Overall, output of the electronics cluster increased 7 per cent year on year in the first nine months of this year.
The demand for chips remains strong, economists noted.
OCBC bank head of treasury research and strategy Selena Ling said: “Electronics continues to benefit from the semiconductor upturn, with work from home arrangements driving demand for cloud computing and data centres. Drivers also include new iPhone launches, and 5G introduction.”
Chemicals also saw a slight increase in output, by 0.4 per cent. The specialities segment grew 25.2 per cent, with higher output in industrial gases and additives, while the other chemical segments edged up 6.7 per cent. But the petrochemicals and petroleum segments contracted on the back of plant maintenance shutdowns.
In the first nine months of this year, output of the chemicals cluster fell 3.5 per cent compared with the same period in 2019.
The transport engineering cluster recorded a plunge in output of 35.8 per cent year on year in September.
The land segment grew 35.1 per cent but this was offset by sharp declines of 40.9 per cent in marine and offshore engineering and a drop of 44 per cent in aerospace output.
The levels of activity in the yards and aerospace firms remained low as new orders were adversely impacted by the weak global oil and gas market and coronavirus-led travel restrictions respectively, EDB said.
Overall, transport engineering output shrank 24 per cent in the first nine months of this year.
The precision engineering cluster recorded a drop in output of 1.5 per cent in September, with the machinery and systems segment dipping 0.7 per cent with lower output of industrial process equipment, refrigerating and air-conditioning equipment and mechanical engineering works offsetting the gains in semiconductor equipment.
The precision modules and components segment fell 3.8 per cent on account of lower production of optical products as well as dies, moulds, tools, jigs and fixtures.
But overall, the precision engineering cluster grew 10 per cent from January to September.
General manufacturing output also fell, by 8 per cent, with all segments recording output declines. The food, beverage and tobacco segment fell 6.1 per cent, largely led by lower production of milk powder, as a result of plant maintenance. The miscellaneous industries segment declined 8 per cent as output of construction-related products was negatively affected by the slow resumption of domestic construction activities.
The printing segment shrank 16.7 per cent with lower demand for print jobs amid Covid-19.
On a seasonally adjusted month-on-month basis, manufacturing output increased 10.1 per cent in September. Excluding biomedical manufacturing, it dipped 1.6 per cent.
Growth is expected to remain uneven across different clusters and segments, as some like transport engineering were hard hit by the pandemic.
Maybank Kim Eng analysts Chua Hak Bin and Lee Ju Ye said: “Transport engineering is not seeing any improvement as marine and offshore, and aerospace, are mired in a prolonged slump due to the weak global oil and gas market and travel restrictions.”
But some segments within the manufacturing sector are expected to continue to perform well due to firm demand conditions.
Dr Chua and Ms Lee said: “Singapore is benefiting from the pandemic-induced demand for semiconductors, pharmaceuticals and medical technology.
“Manufacturing is exceptionally resilient in this pandemic recession as supply chains and trade flows faced only temporary disruptions. Global stockpiling of medicine and drug ingredients by companies and governments to ensure sufficient supplies is driving the surge.”
Ms Ling added: “Barring heightened or protracted uncertainties arising from the upcoming American elections for instance, or major economies going back into lockdowns to contain the resurgent Covid-19 waves, it looks like the domestic manufacturing engine should be the key outperformer for the rest of the year for the Spore economy.”