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Singapore’s manufacturing sector grew for the eighth consecutive month last month, which was driven by a low base among the Covid-19 restriction measures last year. Industrial production increased by 27.5% year-on-year, slightly higher than the 27.2% median estimate in a Bloomberg survey and the adjusted growth of 27% in May.

According to data from the Economic Development Commission on Monday (July 26), excluding the volatile biomedical manufacturing sector, production increased by 24.8%.

On a seasonally adjusted monthly basis, the factory’s total output fell by 3%. Excluding the biomedical manufacturing industry, production grew by 0.7%. Analysts said that even if the favorable base effect fades and growth slows down, continued demand for semiconductors and related products should continue to support the entire manufacturing industry in the coming months.

The biomedical manufacturing group reported a year-on-year increase of 42.5% in output last month, of which the pharmaceutical sector was driven by the increase in the output of active pharmaceutical ingredients and biological products. Due to increased export demand for medical products, the medical technology segment increased by 37.5%.

Compared with the previous year, the production of biomedicine in the first half of this year has increased by 5%.

Singapore’s main electronics manufacturing industry increased by 26.2% compared to the previous year. All market segments are expanding except for information communication and consumer electronics. The growth was driven by the semiconductor sector, which grew by 28.2% driven by demand from cloud services and 5G markets. Compared with the same period last year, the cluster increased by 23.6% in the first half of 2021.

The output of precision machinery increased by 22.2% compared to the previous year. The increase of 28.6% in the field of machinery and systems was driven by the increase in the output of semiconductors and industrial process equipment.

Chemical production increased by 30.6% compared to the previous year, while the petroleum and specialities industries recorded significant growth due to low production a year ago, suspension of plant maintenance and weaker export demand amid the Covid-19 outbreak.

UOB Economist Barnabas Gahn said that in addition to the surge in electronics and precision engineering due to the high global demand for semiconductor products, economic recovery in Singapore’s key trading partners, amid a global rebound, should also support the chemicals cluster for the year ahead.
However, he warned that downside risks still exist, and pointed out that the production of some of Singapore’s major trading partners continues to slow down. These trading partners are still facing a high Covid19 infection rate, which could weaken business demand and limit exporting and production growth in the coming months.

Selena Ling, Head of Research and Strategy Department of OCBC Bank, said that in view of the impact of the lower base effects caused by strict measures against Covid-19 last year, production growth should continue in the short term.

At the same time, transport engineering has grown by 28.3%, and the marine and marine technology and aerospace industries have benefited from the low base last year due to travel restrictions and Covid-19-related slowdowns. Manufacturing production increased by 17.4% compared to the previous year.

As the production of construction materials was affected by restrictions of movement in foreign worker dormitories, the miscellaneous industrial sector rose 62.2% from the previous year’s low, outweighing the decline in the food, beverage, tobacco and printing sectors.

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