Manufacturing to deteriorate further after dismal Q1

Growth was due to volatile segments.

Singapore’s manufacturing sector will stay weak and potentially deteriorate further after being the weakest spot in the first quarter.

The manufacturing sector contracted by 2.7% year-on-year in the first quarter, extending its 1.3% decline in Q4. It was one of only two quarters to decline in Q1.

According to HSBC, this is because NODX growth in Q1 was driven by the highly volatile pharmaceutical and transport engineering segments.

“Most signs point to manufacturing staying weak - and potentially even deteriorating - going forward. The Purchasing Managers' Index has been in contractionary territory over the past five months, while IP for April declined 5.8% m-o-m sa due primarily to a pull-back in pharmaceutical output and weakness in transport engineering. For 2Q as a whole, manufacturing output is likely to stay roughly flat, as we expect firms to re-build inventories following a significant drawdown in 1Q, which should offset current weakness in global demand,” stated HSBC.