May manufacturing performance beats median estimates

Transport engineering cluster clocked fastest growth pace since 2006

Singapore’s May manufacturing saw a record breaking jump of 30% YoY, the fastest pace in 10 years, bolstered by low base from a year ago amidst circuit breaker measures.

OCBC said this surpassed Bloomberg’s median estimate of 24.1%. On a seasonally adjusted basis, manufacturing output rose 7.2% MoM, easily beating expectations of a 0.5% contraction. Double-digit YoY gains were noted across the clusters, in large part due to the low base from the Circuit-breaker last year.

Notably, the precision engineering 58.6% YoY posted the biggest annual growth rates last month amidst increased demand for machinery & systems.

Meanwhile, transport engineering clusters grew by 44%, clocking the fastest growth pace since October 2006

According to OCBC economist Howard Lee, May’s industrial output carried a healthy dose of optimism, as it increasingly appears that Singapore’s manufacturing strength is increasingly broad-based and not entirely reliant on the twin pillars of electronics and biomedical clusters. 

“In fact, with the slight exception of the electronics cluster, all other clusters appear to have rebounded from April’s industrial output disappointment. This is no mean feat, given that Singapore was imposed with Phase 2 (Heightened Alert) restrictions last month. It shows domestic manufacturers are more prepared for pandemic contingencies and bodes well for the local manufacturing scene for the rest of the year,” Lee said.

The growth in all the sub-sectors across the manufacturing spectrum is a phenomenon that has not been seen since April 2019, according to UOB economist Barnabas Gan.

Gan expects Singapore’s electronic and precision engineering clusters to support the overall manufacturing sector, on the back of global growth and a positive external environment.  

Despite not leading manufacturing performance in May, Gan said that the electronic cluster has been the key performer in the first five months of 2021 at 22.9% YoY.

“Similarly, the precision engineering cluster also surged 22.7% YoY, led by the demand for semiconductors and its related products. Separately, the economic recovery seen in Singapore’s key trading partners amidst a global economic recovery environment should also support the chemicals cluster for the year ahead,” Gan added.