Local manufacturing crippled by electronic cluster's structural demise

And volatile pharma can't pick up the slack.

Singapore's manufacturing sector continues to be crippled by the structural deterioration in the electronic cluster. After May's unexpectedly weak non-oil domestic exports (NODX) print, analysts warn that the country's export outlook will remain under pressure for the foreseeable future.

"The long-evident structural demise of the electronics cluster continued to weigh heavily and was compounded by weak non-chemicals, non-electronics shipments," said Philip McNicholas, ASEAN Economist, BNP Paribas Singapore.

This leaves Singapore in the the less-than-ideal position of relying on the notoriously volatile pharmaceuticals sector to underpin manufacturing growth, McNicholas added.

However, DBS senior economist Irvin Seah warned that pharmaceuticals will never be able to pick up the slack in manufacturing.

"The dip in pharmaceutical exports is a reminder that we can never count on the cluster to provide support on the external front. Volatility is the hallmark of the pharmaceutical sector and will continue to create swings in the overall export performance going forward," Seah said.

NODX posted a 0.2% decline in May, in contrast to the 2.2% year-on-year increase in the previous month and a wide miss from consensus expectations of a 2.3% year-on-year gain.