Manufacturing sector drove Singapore economy up 4.9%

But manufacturing's growth feared to slow.

Manufacturing sector's stunning performance pushed Singapore GDP up 4.9% YoY. DBS noted that the economy grew 2.3% QoQ saar in the first quarter. This is in line with its above consensus forecast of 2.5% QoQ saar (consensus: 1.2%). However, the year-on-year figure has surprisingly been revised lower to 4.9% YoY, from 5.1%, which was previously reported in the advance GDP estimate.

Here's more from DBS:

The downward adjustment comes on the back of significant revisions to last year’s growth figures. This is the problem with the yearly figure. It is always prone to base effect. Any backward adjustment will change today’s number. the quarter.

Nonetheless, the stronger than expected showing in March industrial production growth has led to a robust manufacturing growth in the quarter. The sector expanded by 11.9% QoQ saar (9.8% YoY). The surge in the manufacturing sector has indeed been a key factor behind the healthy GDP performance in the quarter.

But growth momentum in the manufacturing sector may slow going forward. The electronics cluster is losing momentum. 

The recent readings in the SEMI book-to-bill ratio and the electronics PMI are hinting of moderation in production activity. Manufacturers appear to be recalibrating their production pace to cater for a slightly softer demand ahead. While industries such as the pharmaceutical and the petrochemical may provide some upsides, it is difficult to count on the predictability of these clusters to sustain growth.