Biomedical, electronics continue to support Singapore’s manufacturing sector in October

Singapore’s manufacturing sector continued to be in an upward trend during the month of October, helped by buoyant support from biomedical and electronics sector. Also, Output level in the pharmaceutical industry is back in the normalized level after the sharp declines in Jul-Aug due to routine plant shutdowns.

Latest October industrial output registered an expansion of 1.2 percent y/y. While this is a moderation from a 7.7 percent growth in the previous month, the general trend is still of a modest recovery, led mainly by the key electronics (+24.6 percent) and biomedical (+11.3 percent) clusters. However, general manufacturing (-22.2 percent) and transport engineering (-26.9 percent) have been the key drag.

Further, a turnaround in global electronics cycle has lifted domestic electronics output but unfortunately was not captured in the export numbers (see chart, next page). Separately, the offshore and marine engineering has continued to be a drag on manufacturing growth. Consolidation in the cluster is still ongoing and the slump is expected to persist. Though oil prices have pretty much bottomed, a turnaround is still beyond sight.

But the caveat is that this recovery path will likely be tepid given the challenging external environment. As long as electronics output continues to march north, with biomedical providing some boost at times, and the drag from the offshore marine engineering dissipating in the coming quarters, we should see better manufacturing growth in 2017, DBS reported.