Chart of the Day: Biomed drags Singapore manufacturing down

The sector posted a 13.5% decline in output.

Due in part to base effects, with Lunar New Year falling in January this year compared to February last year, growth in Singapore’s manufacturing output slowed down to 2.2% last month, down from the 22.1% y-o-y recorded in December 2016.

Data from the UOB Global Economics and Market Research show that contraction in several sectors has also weighed on the overall performance, with the biomedical manufacturing cluster falling 13.5% y-o-y, owing to a decline in pharmaceutical production, and the transport engineering cluster declining 3.8% y-o-y. Marine and offshore engineering also contracted 18.9% y-o-y, while general manufacturing fell 13.8% y-o-y.

On the other end, the biggest gainers include the precision engineering cluster, which gained 24% y-o-y on the back of higher demand for semiconductor-related equipment, and the chemical cluster, which increased 3.5% y-o-y from gains in the output of petrochemicals.

The electronics cluster has also expanded 14.8% y-o-y, supported by strong growth in the semiconductors segment, which grew 25.8% y-o-y.

UOB projects that the seasonality effect will also have an upside once February data comes in, forecasting a 7.2% y-o-y growth for the month. It also retains its outlook for the industrial sector, pegging growth at 2.2% for 2017.

The bank has likewise increased its GDP growth forecast for the year to 2.4% from 1.8%, citing that the previous year’s strong manufacturing performance could spill over while government spending could provide fiscal stimulus.

However, the bank cautioned against “anti-globalisation antics from the developed world”, saying there could be adverse effects once the Trump administration implements import tariffs on goods from China, a key export market for Singapore.