Singapore's factory output might be a bright spot in the economy, thanks to the booming pharmaceutical and electronics sectors, according to data released yesterday by the Economic Development Board (EDB).
Manufacturing output surged 24.2 per cent last month, compared with the same month last year - the biggest year-on-year increase since December 2011.
Excluding biomedical manufacturing, output grew 8.5 per cent.
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 - 30.1 per cent last month. 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.
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 with higher output in industrial gases and additives. But the petrochemicals and petroleum segments contracted on the back of plant maintenance shutdowns.
The transport engineering cluster recorded a 35.8 per cent plunge in output last month.
Growth in the land segment was offset by sharp declines in marine and offshore engineering and aerospace, as new orders were adversely impacted by the weak global oil and gas market and coronavirus-led travel restrictions.
The precision engineering cluster recorded a drop in output of 1.5 per cent last month, with the machinery and systems segment dipping 0.7 per cent. But overall, the cluster grew 10 per cent from January to last month.
General manufacturing output also fell, by 8 per cent.
On a seasonally adjusted month-on-month basis, manufacturing output increased 10.1 per cent. Excluding biomedical manufacturing, it dipped 1.6 per cent.
Growth is expected to remain uneven across different clusters and segments, as some such as transport engineering were hard hit by the outbreak.
United Overseas Bank economist Barnabas Gan said: "Low oil prices which is expected for the rest of 2020 will likely depress the chemicals and transport engineering clusters. Meanwhile, Covid-19-related factors may continue to weigh on the general manufacturing cluster."
But some segments are expected to continue to perform well due to firm demand conditions.
Maybank Kim Eng analysts Chua Hak Bin and Lee Ju Ye 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 said: "Barring heightened or protracted uncertainties arising from the upcoming American election for instance, or major economies going back into lockdown 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 Singapore economy."