Analysts cautious on outlook as Singapore factory output sees fourth straight month of growth

SINGAPORE – Singapore’s manufacturing production capped off 2025 with a fourth straight month of growth in December, led by the electronics and transport engineering sectors.

Total factory output rose 8.3 per cent year on year, easing from November’s growth of 18.2 per cent, according to data from the Economic Development Board (EDB) released on Jan 26.

This was still higher than the 7.5 per cent forecast by analysts in a Bloomberg poll.

Excluding the volatile biomedical manufacturing sector, manufacturing output increased 16 per cent.

While December’s performance again pointed to the resilience of Singapore’s manufacturing sector, analysts say they are cautious about 2026’s outlook.

It is unlikely that 2026 would see similar strong growth in manufacturing output owing to several potential headwinds, said DBS Bank senior economist Chua Han Teng.

Factories would have to face a high base from 2025, as well as lingering challenges arising from tariffs.

Mr Chua added that the divergence between the strong performance of the electronics cluster and the weaker non-electronics clusters could continue in the near term – going by the latest forward-looking manufacturing purchasing managers’ indexes (PMIs).

There could also be more “external pressures on non-electronics manufacturing and exports as the lagged impact of higher US tariffs globally bites”, he said.

The key electronics sector, which accounts for more than a third of Singapore’s manufacturing output, saw production jump 30.8 per cent.

This was led by the semiconductors segment, which grew 32.4 per cent on the back of sustained and strong demand for artificial intelligence-related products.

The other electronic modules and components, as well as infocomms and consumer electronic segments, also grew 25.5 per cent and 20.5 per cent, respectively. Meanwhile, the computer peripherals and data storage segment contracted 5.4 per cent.

Overall, the electronics sector grew 12.7 per cent in 2025 compared with 2024.

Ms Selena Ling, chief economist at OCBC Bank, said that the momentum arising from AI-related demand appears to be still strong and should lift the manufacturing and export tide for Asian exporting nations, including Singapore.

Maybank’s analysts Chua Hak Bin and Brian Lee said that manufacturing and export growth will likely remain firm at least into the first half of 2026, supported by the AI investment boom tailwind.

This will also be bolstered by the opening of Micron’s advanced high-bandwidth memory chips facility later in 2026 and the start of volume production at UMC’s facilities, which will deepen Singapore’s role in the AI supply chain.

Output from the transport engineering sector grew 19.9 per cent, with higher production of aircraft parts and sustained maintenance, repair and overhaul jobs from commercial airlines driving the aerospace segment’s growth by 35.9 per cent.

The marine and offshore segment also grew 8.5 per cent owing to a higher amount of work done in oil rigs and offshore platforms.

For the whole of 2025, the transport engineering sector expanded 18.7 per cent.

The precision engineering sector saw an increase of 3.4 per cent in production, with the precision modules and components segment growing 15.4 per cent because of higher output of electronic connectors, optical instruments, plastic precision components, as well as electric power cables and wires.

The machinery and systems segment grew 1 per cent, led primarily by higher production of front-end semiconductor equipment.

Overall, production for the precision engineering sector grew 3.6 per cent in 2025.

Despite seeing some growth in the production of certain items, output from the general manufacturing sector remained unchanged in December.

The food, beverages and tobacco segment grew 6.3 per cent with higher production of beverage concentrates and milk powder. In contrast, the printing and miscellaneous industries segments declined 2.5 per cent and 7.5 per cent, respectively, with the latter recording lower production of paper and paperboard containers and structural metal products.

The sector contracted 7.8 per cent overall in 2025.

The chemicals sector saw production fall 1.6 per cent despite the specialities and petroleum segments expanding 3.9 per cent and 2.5 per cent, respectively, driven by higher output of mineral oil additives. The fall was owing to a contraction of 23.2 per cent in the petrochemicals segment as a result of weak demand and plant maintenance shutdowns.

For the whole of 2025, the chemicals cluster grew 0.2 per cent.

Biomedical manufacturing output fell 38.8 per cent, largely attributed to the contraction of 69.7 per cent in the pharmaceuticals segment owing to a different mix of active pharmaceutical ingredients being produced compared with a year ago.

Conversely, healthy demand for medical devices led to a 4.4 per cent growth in the medical technology segment.

Overall, output for the biomedical manufacturing cluster expanded 16.3 per cent in 2025.

Ms Ling noted that the healthy production in industries like transport engineering is a good sign as it indicates Singapore’s manufacturing sector’s growth does not hinge solely on the electronics industry.

This is a silver lining, given that the external headwinds of geopolitical uncertainties and potential product-specific US tariffs on key sectors like pharmaceuticals and semiconductors are likely to remain pertinent.