SINGAPORE: Singapore’s monthly manufacturing output decreased in May after seeing a slight uptick the previous month, data from the Singapore Economic Development Board (EDB) showed on Wednesday (Jun 26).
Manufacturing output fell 2.4 per cent in May on a year-on-year basis. On a seasonally adjusted month-on-month basis, production went down 0.7 per cent.
"This is against market expectation for a milder contraction of 1.8 per cent year-on-year, suggesting that Singapore’s manufacturing environment still remains dragged by the poor export environment, albeit observing a high base in May 2018," UOB's global economics and markets research division noted.
Output fell 4.9 per cent year-on-year excluding biomedical manufacturing, which saw an increase of 8.8 per cent in May. Under this cluster, pharmaceuticals output saw an increase of 15.9 per cent, while medical technology saw a decline of 6.8 per cent due to lower export demand for medical devices.
However, growth in the biomedical manufacturing sector "tends to be short-lived" due to the volatility of pharmaceuticals demand, said Dr Tan Khay Boon, senior lecturer at SIM Global Education.
Transport engineering saw a slight uptick of 2.9 per cent, boosted by the 17.2 per cent and 0.6 per cent growth recorded for the aerospace and land transport segments respectively.
This was tempered, however, by a 10.9 per cent decline in marine and offshore engineering, which recorded lower levels of offshore and shipbuilding and repairing activities.
The general manufacturing segment also reported a rise in output, at 4.9 per cent. A higher beverage product output contributed to the 9.3 per cent growth in the food, beverages and tobacco segment. Miscellaneous industries grew 3 per cent, but the printing segment saw a decline of 9.1 per cent.
The largest decrease in May was in the electronics cluster, which fell 10.8 per cent. The entire cluster saw a decline in output, except for infocomms and consumer electronics, which grew 6.2 per cent, and electronic modules and components, which grew 0.8 per cent.
"Among the manufacturing clusters, the one that is most badly affected is the electronics cluster, where Singapore manufacturers are part of the global supply chain for components," Dr Tan said.
"The decline in manufacturing output is expected as the trade dispute between US and China shows no sign of abatement and the effect has changed from a negative sentiment to an actual decline in manufacturing demand."
Two other clusters reported declines in output for the month – precision engineering recorded a 4.7 per cent drop and the chemicals cluster’s output decreased 0.4 per cent, according to EDB.
The precision engineering cluster experienced a decline of 16.6 per cent in the machinery and systems segment as output of refrigeration systems, process control equipment and semiconductor-related equipment fell. In contrast, precision modules and components grew 17.1 per cent.
UOB said the semi-conductor related sectors were the "key drags to the overall print", and that the precision engineering cluster has contracted for its seventh straight month.
"The fall has been moderating to -4.7 per cent year-on-year, down from a significant decline of -14.8 per cent year-on-year in January 2019," the bank added.
Meanwhile, a number of segments under the chemicals cluster saw growth, but these were offset by a 9.5 per cent decline in petrochemicals, which was affected by maintenance shutdowns in some plants.
The decline in manufacturing momentum is "not isolated to Singapore", UOB said, adding that the decline has been "seen broadly across other key Asian economies".
These include the Philippines, Taiwan, South Korea, Japan and Thailand, the bank added.