Singapore’s manufacturing output has expanded by 16.3% y-o-y in July, making this the ninth straight month of growth.
The figure, however, represents a slight easing from the 30% growth recorded in May, and the 27.5% expansion logged in June.
Excluding biomedical manufacturing, output grew by 5.8% y-o-y.
With the exception of the chemicals cluster, all sectors registered broad-based growth in the month of July.
Output for biomedical manufacturing increased 86.6% y-o-y in July, led by the pharmaceuticals output, which surged 134.9% y-o-y.
The spike in pharmaceuticals output was due to a different mix of active pharmaceutical ingredients and higher output of biological products.
Within the cluster, the medical technology segment rose 17.4% with higher export demand for medical devices.
The transport engineering cluster saw output expanding 33.1% y-o-y in July. The marine & offshore engineering segment rose 52.6% from a low base in 2020 due to movement restrictions in foreign worker dormitories. The aerospace segment posted a 22.8% growth from a low base of maintenance, repair and overhaul activities in 2020 due to international travel restrictions.
See also: Singapore's manufacturing output up by 27.5% y-o-y in June
Output for precision engineering increased by 20.3% y-o-y as the machinery & systems segment saw a 26.8% y-o-y growth with higher production of semiconductor equipment. The precision modules & components segment rose 9.2% due to higher production of metal and plastic precision components.
Output for the general manufacturing cluster expanded by 11.0% y-o-y in July dragged by an 8.4% decline in the food, beverage & tobacco segment as well as a 14.2% decline in the printing segment. The food, beverage & tobacco segment, in particular, saw lower production of dairy products and milk powder due to weaker export demand. This was mitigated by the expansion in the miscellaneous industries segment, which grew 57.2% y-o-y from a low base in 2020.
Electronics output increased 1.5% y-o-y from the high production base in 2020. All segments saw output growth except the semiconductors segment, which saw a 0.4% decline.
Chemicals output contracted 5.6% y-o-y in July due to contractions in the other chemicals and specialty chemicals segments, which declined by 3.6% and 25.0% respectively. This was mitigated slightly by the petroleum segment, which saw output growth of 28.5% y-o-y from the low production base in 2020.
On a three-month moving average basis, manufacturing output increased 23.6% y-o-y in July.
On a seasonally adjusted month-on-month (m-o-m) basis, manufacturing output, however, fell 2.6%.
Excluding biomedical manufacturing, output fell 7.9% m-o-m.
OCBC Bank's head of treasury research & strategy, Selena Ling says she sees that the manufacturing sector looks set to achieve her full-year forecast of 10.3% y-o-y.
The unchanged estimate comes as the low base effects in 2020 continue to fade.
"The base effects from August-December 2020 are relatively high with the exception of October 2020, suggesting that the best days for manufacturing and electronics could be behind us," says Ling. "Nevertheless, as vaccination ramps up and Covid restriction measures are gradually relaxed in key manufacturing and electronics centres in Asia, coupled with global chip manufacturers also ramping up capacity (as reflected in the semiconductor equipment demand), the chip supply situation may resolve over time, even if short-term hiccups continue for now."
Maybank Kim Eng economists Chua Hak Bin and Lee Ju Ye have kept their forecast for the full year unchanged at 6.8% for 2021 and 3.5% in 2022.
The way they see it, the manufacturing sector has likely peaked in 2Q2021 after four consecutive quarters of double-digit growth.
Looking ahead, Chua and Lee expect the growth momentum to "continue moderating in August and possibly decelerate to single-digit growth in September".
"Services will likely lead the recovery in 4Q2021 with the reopening of the economy and easing of border controls," they write.
UOB economist Barnabas Gan has, too, kept his estimates at 8.0% y-o-y in 2021 as July's numbers show signs of moderation.
The relatively stronger export demand suggests that demand in the region has continued to remain buoyant despite Covid-19 concerns, he writes.
Upside risks include a quicker-than-expected vaccine rollout, while uncertainties from the Covid-19 virus poses as a downside risk to his outlook, he adds.
"Overall, we recognise that the low base effects are expected to dissipate further in 2H2021, as industrial production rose 11.9% in 2H2020, from merely 3.8% in 1H2020, thus explaining the expected slowdown to our full-year industrial production growth outlook of 8.0%, from year-to-date’s performance of 14.7%."
Photo: Tiong Woon
