Manufacturing industry boosts economic growth in Q3 2020

Singapore’s Purchasing Managers’ Index remained positive for six consecutive months.

The manufacturing industry contracted only 5.8% YoY in Q3 2020, a significant improvement from the 13.2% YoY contraction in Q2 of the same year, according to Cushman & Wakefield.

The industry also expanded by 10% YoY in Q3 with economic growth said to be driven by the phased resumption of activities, following the circuit breaker in Q2.

According to Wong Xian Yang, associate director of research for Singapore and Southeast Asia at Cushman & Wakefield, the manufacturing industry was the "star performer" for the economic growth in Q3, with the expansion attributed to output growth in the biomedical manufacturing, electronics, and precision engineering clusters on the back of a global boom in the semiconductor industry.

“The Singapore’s Purchasing Managers’ Index (PMI), a key barometer for manufacturing sentiments, remains in positive territory for six consecutive months since July 2020. This bodes well for the industrial market as the manufacturing economy is showing signs of recovery,” he added.

Meanwhile, the outlook for the industrial market is said to be mixed depending on the segment as demand for good quality business park space will be in demand, according to Brenda Ong, executive director of logistics & industrial at Cushman & Wakefield Singapore.

“Overall high-tech and conventional factory rents have declined in tandem with weak economic conditions. For 2021, high-tech factory rents should stabilise, bolstered by bio-medical, electronics demand. On the other hand, conventional factory rents are expected to remain weak amidst an uncertain economic recovery and a continued slowdown in construction activities,” Ong added.