Manufacturers hit the brakes in August, with growth decelerating to its slowest pace this year and confounding the more optimistic experts in the process.
Factory output rose 3.3 per cent compared with the same month last year, and was well down on the revised 6.7 per cent expansion in July, according to Economic Development Board data yesterday.
It was also well under the 4.7 per cent growth tipped by analysts polled by Bloomberg.
CIMB Private Banking economist Song Seng Wun said the high base of last year's strong manufacturing performance was partly behind the lower numbers now.
"What we are seeing now is a bit of a pullback, some of it perhaps also due to uncertainties of the impact of trade tensions in the coming months," he told The Straits Times, referring to the trade war between the United States and China.
All clusters, except precision engineering, recorded slower growth last month.
If the volatile biomedical manufacturing cluster were to be excluded, factory output would have grown 3 per cent last month.
The key electronics sector continued to lose steam.
It rose 3.6 per cent, mainly due to the other electronic modules and components as well as semiconductor segments, but this was well behind the expansion of 8 per cent in June and 5.1 per cent in July.
Growth in the electronics sector is at its slowest pace since February 2016, said Ms Selena Ling, OCBC Bank's head of treasury research and strategy.
She added that "the electronics underperformance may not have ended yet", in part due to the strong manufacturing performance last year, when it grew 33.5 per cent over 2016.
Nomura research analyst Euben Paracuelles noted that the tech cycle appears to be on a downturn, with growth softening after a strong run since 2016, reflecting in part "the weakness in electronics exports".
The biomedical manufacturing cluster expanded 4.2 per cent last month, a sharp slowdown from growth of 10.4 per cent in July. Pharmaceuticals output rose 8.7 per cent, but the medical technology segment fell 8.2 per cent.
Precision engineering was the only bright spot, with output increasing 5.6 per cent, up from 2.4 per cent in July.
The chemicals segment expanded 5.7 per cent, while transport engineering grew 4.7 per cent, thanks in part to more work for the marine and offshore engineering sector.
All segments in general manufacturing - which include food, beverages and tobacco - declined last month, with overall output falling 6 per cent.
Ms Ling said that there are probably still downside risks for the next two months, given the high base in September and October last year, when factory output expanded by more than 14 per cent in both months. However, economists are also watching for any short-term realignment of production chains to mitigate the US-China tariffs, she said.
Mr Song added that it is likely that Singapore will continue to see low single-digit growth in the coming months, with businesses and consumers resigned to the expectation that the escalations in trade tensions could persist for longer than expected.
One effect is that businesses may continue to buy more ahead of expected tariff increases, supporting the manufacturing sector.
But even as growth for the rest of the year may still be positive, it is harder to predict if this will carry on into next year and beyond, Mr Song said, noting: "What we may see today - growth - might be all given back next year."