ANN/THE STRAITS TIMES – Singapore’s manufacturing sector continued its upward trajectory in November, recording a fifth straight month of growth, driven by a surge in the electronics industry.
Analysts attribute the expansion to robust global demand and possible front-loading activities ahead of potential United States (US) tariff hikes.
Data from the Economic Development Board released yesterday showed total factory output rising 8.5 per cent year-on-year. However, this fell short of the 9.7 per cent growth forecast by economists polled by Bloomberg. Excluding the more volatile biomedical sector, manufacturing output saw a stronger increase of 13 per cent.
“Export demand for electronics remains robust, with the global semiconductor industry still in an upcycle,” noted senior country risk analyst at BMI Yen Nee Lee. She highlighted that Chinese exporters are likely accelerating shipments to the US ahead of President-elect Donald Trump’s inauguration on January 20, boosting demand for intermediate goods from Singapore.
Despite the positive figures, analysts caution against over-optimism for 2025. Concerns about the Trump administration’s protectionist policies and rising geopolitical tensions could pose challenges for the manufacturing sector moving forward.
Associate economist at UOB Jester Koh also noted the ongoing upturn in the electronics cycle, with tailwinds from “some front-loading of exports and attendant ramp up in production ahead of Trump’s proposed tariffs on US imports”.
This could help support growth momentum in trade-related sectors, including manufacturing, into early 2025, he said.
The electronics industry, which accounts for nearly half of Singapore’s manufacturing output, saw an increase of 26.2 per cent year-on-year, higher than the 4.3 per cent rise in October.
Within the cluster, semiconductor output surged 28.8 per cent, while computer peripherals and data storage expanded 23.6 per cent, and infocomms and consumer electronics added 8.7 per cent. Other electronic modules and components fell 6.5 per cent.
Precision engineering output inched 0.6 per cent higher year-on-year. Within the cluster, the machinery and systems segment expanded 4.3 per cent, driven by increased production in front-end semiconductor equipment. However, the precision modules and components segment fell 5.2 per cent, mostly led by lower output of optical instruments and metal precision components.
Koh said the manufacturing outlook remains cloudy beyond early 2025.
“Downside risks could emanate from further protectionist measures under Trump’s ‘America First’ policy, elevated geopolitical tensions, possible peak in the electronics cycle and uncertainty over the pace of monetary easing by major central banks,” he said.
Barclays economist Brian Tan also sees a possible slowdown ahead in chip manufacturing.
“We are seeing around Asia – not just in Singapore – signs of fatigue in the semiconductor cycle. If this falters, gross domestic product growth in 2025 could easily disappoint,”
Tan said.
He added, “We expect the uncertainty over US trade policy to start weighing on economic activity regardless of when tariffs are announced. Should US tariffs materialise, their impact on ultra-open Singapore is likely to be significant.”
Beyond electronics and the related precision engineering cluster, Singapore’s other manufacturing industries fared worse in November. Biomedical manufacturing output fell 21.2 per cent from a year ago.
Within the cluster, the pharmaceuticals segment declined 37.1 per cent on account of a different mix of active pharmaceutical ingredients being produced, compared with a year ago. The medical technology segment grew 5.8 per cent thanks to continued export demand for medical devices.
General manufacturing output dropped 2.6 per cent, with all segments reporting declines.
