Singaporean manufacturing output shrank for the third straight month, falling 8.4 percent year-on-year in July. However, it rose 1.6 percent on a month-on-month basis. The year-on-year data is worse than the expectations of a fall of 6.4 percent and a deterioration from the fall of 6.5 percent seen in the prior month. The contributing reasons are a big let-down in the biomedical cluster which shrank for the second straight month by 24.8 percent year-on-year, a weaker electronics performance and a relatively high base in July last year.
The other drags were the transport engineering, especially for the aerospace segment because of the covid-hit aviation sector, and general manufacturing industries which also saw double-digit contractions in July.
Biomedical manufacturing also fell for the second month in spite being touted as a bright spot in the covid crisis. The biomedical output might remain negative for a couple more months as the pullback is possibly overdue, noted Selena Ling, Head of Treasury Research and Strategy, OCBC Bank.
Global and regional economic signals so far do imply some rebounds from the second quarter lows, albeit not back to pre-Covid levels yet as there is still some caution about recurrent waves of infections and re-imposition of social distancing measures. For the precision engineering cluster, the machinery & systems segment is also still doing well.
“Our full-year 2020 growth forecast for the manufacturing sector is still positive around 2+ percent yoy, with the GDP growth forecast also intact around -5.5 percent yoy”, added Selena Ling.
