Singapore's factory output fell last month after the key electronics industry slumped amid the coronavirus outbreak, according to figures released by the Economic Development Board yesterday.
Manufacturing output dropped 1.1 per cent last month over the same period last year, reversing the 3.5 per cent rise seen in January. Excluding biomedical manufacturing, output fell by a bigger 2.5 per cent margin.
But the coronavirus' impact was more evident from the seasonally adjusted month-on-month comparison, as last month's output sank 22.3 per cent from January. The outbreak began to accelerate at the end of January - though China has begun to reopen factories this month in a tentative recovery.
Maybank Kim Eng economists Chua Hak Bin and Lee Ju Ye noted that the closure of Chinese factories disrupted electronics supply chains, accounting for the sharp contraction in electronics output.
But this is likely to herald only the start of a steeper decline as the virus spread globally this month - leading to grounded airlines, travel restrictions and lockdowns - with the full impact not yet reflected in last month's data.
Dr Chua and Ms Lee said: "The first-quarter advance estimate for manufacturing at minus 0.5 per cent implies that this month's industrial production contracted by 4.3 per cent, but we expect the decline to be more severe as the Covid-19 outbreak has intensified outside of China."
All the main factory clusters saw output increases, apart from the electronics sector.
The key sector, which accounts for over a quarter of total production, fell 17.3 per cent last month, deepening the 6.1 per cent drop in January. Semiconductor output was worst hit, sinking 18.7 per cent, while computer peripherals and data storage fell 17.4 per cent.
Precision engineering expanded output by 26.2 per cent last month compared with a year ago when production was low due in part to the Chinese New Year holidays.
The machinery and systems segment increased 29.4 per cent, while the precision modules and components segment grew 20.1 per cent.
General manufacturing grew 16.1 per cent, on the back of fewer production days over the Chinese New Year holidays last year.
The miscellaneous industries - printing, as well as food, beverage and tobacco segments - all rose in output. Transport engineering expanded 10.9 per cent last month. The aerospace segment increased output by 17.9 per cent with higher levels of repair and maintenance activities from commercial airlines. The marine and offshore engineering segment grew 5.6 per cent.
Biomedical manufacturing increased output by 6.4 per cent, as the medical technology segment grew 9.1 per cent with higher export demand for medical devices, while pharmaceuticals output rose 5.3 per cent, with increased production of biological products.
The chemicals cluster also grew, by 5.2 per cent year on year, with the specialities segment, petrochemicals and petroleum refining all expanding. But the road ahead might be even more gloomy, analysts warned.
United Overseas Bank economist Barnabas Gan said: "Into the year ahead, we continue to see headwinds against Singapore's manufacturing and trade environment led by global supply chain disruptions."
OCBC Bank's head of treasury research and strategy Selena Ling said manufacturing could contract up to 16 per cent year on year in the second quarter as global lockdowns intensify, while the full-year figure could shrink by more than 5 per cent. "Even without the US-China trade war, the Covid-19 pandemic is the black swan event that has... impacted global demand and dashed hopes of a manufacturing rebound," she added.