Updated: 06/26/2014 23:42

Singapore's May manufacturing output declined 2.5%

Singapore's May manufacturing output declined 2.5%

Singapore's manufacturing output for May fell 2.5 per cent in May, compared to the same period a year ago. 

That's a much weaker-than-expected performance as economists polled had expected a median growth of 2.6 per cent. 

Data from Singapore's Economic Board or EDB shows the fall was due to declines in two sectors. 

The decline in May's output was due to weak performances in the electronics and biomedical clusters. 

Electronic output fell 7.5 per cent. 

Economist at UOB Francis Tan attributes the poor performance to the semi-conductor segment, which fell 6.4 per cent. 

He expects this segment to see a continued slow-down as some firms may be in the midst of upgrading their equipment to cope with evolving manufacturing needs. 

"The semi conductor industry in the world is very competitive and as our smartphones and tablets are getting stronger, better, faster. On the supply side, the suppliers will have to upgrade their machinery and equipment to supply such better products to the final assembly. That's going to partially negatively impact overall electronic activity." 

While over at the biomedical sector, the fall was led by the volatile pharmaceuticals segment. 

There was a decline of 11.6 per cent in pharmaceuticals, due to a lower production of active ingredients. 

Mr Tan says the decline was unexpected as it had posted growth for the past four months. 

However, not all sectors treaded in negative territory. 

Output for chemicals rose, led by petrochemicals rising 14.6 per cent. 

Transport engineering was also up 5.6 per cent, owing to growth in the aerospace segment. 

And, the precision engineering cluster inched up 0.2 per cent as there was more demand for mechanical engineering work. 

Senior Economist at Mizuho Bank Vishnu Varathan is confident manufacturing output will pick up. 

"I think the bigger picture is that industrial production has continued to outperform exports. So if this is a catch-down phase, then we could see another dip in June. By and large, it does look like the overall outlook could stabilise and brighten slightly if China continues to pick up."

-By Gwen Goh

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