Manufacturing output shrank last month after two straight months of expansion, as the pace of growth in the volatile biomedical cluster slowed sharply.
Overall production fell 7.4 per cent from May last year, after a 13.6 per cent rise in April, Economic Development Board data showed yesterday.
The drop confounded economists, who had tipped a 6.6 per cent rise when polled by Reuters.
Mr Euben Paracuelles, economist at Nomura International, said: “We expect the decline to be sharper in June and therefore a large drop in GDP growth in the second quarter.”
Biomedical output slowed to 5.9 per cent last month from a 100.5 per cent surge in April as growth in the medical technology segment fell 20.1 per cent, in part due to circuit breaker measures.
The pharmaceutical segment, however, expanded 14.7 per cent on the back of higher production of active drug ingredients and biological products.
The biomedical sector, which has lifted output 49.9 per cent so far this year, had held up Singapore’s manufacturing production for the last couple of months.
Overall output expanded 13.6 per cent in April and 21.8 per cent in March, after a 1.1 per cent drop in February.
Excluding biomedical manufacturing, last month’s output was down 10.4 per cent.
Nomura said the surge in pharmaceutical output over the past few months was driven mainly by a change in the product mix rather than a rise in demand related to the Covid-19 outbreak.
“Further out, we expect manufacturing growth to worsen sharply into double-digit negative territory in June, as growth in pharmaceutical output should turn negative on waning support from the change in the product mix and a high base effect, despite the gradual economic reopening which began on June 2,” said Mr Paracuelles.
Electronics production fell 1 per cent year on year last month, even as the semiconductor segment grew 1.6 per cent, supported by demand from cloud services and data centres, as well as 5G markets.
In contrast, the rest of the electronics segments contracted.
Electronics output overall declined 3.6 per cent in the first five months of this year over the same period last year.
Still bigger drops last month came from transport engineering, where output plunged 40.7 per cent, and from general manufacturing, with a 26.9 per cent fall.
UOB economist Barnabas Gan blamed the steeper-than-expected declines in transport engineering and general manufacturing on circuit breaker measures, which spanned all of last month.
“There still remains a high degree of uncertainty over Singapore’s economic prospects. The very nature of the pandemic is fluid, and it could still be more severe and protracted,” he said.
Precision engineering output declined 5.3 per cent year on year last month, dragged down by the precision modules and components segment’s 23 per cent contraction as Covid-19 dampened demand and disrupted operations locally and in key export markets.
Chemical production fell 13.5 per cent year on year with all segments, including petrochemicals and petroleum, contracting due to weak demand and plant maintenance shutdowns.
Overall factory production decreased 16.5 per cent on a seasonally adjusted month-on-month basis.
Excluding biomedical manufacturing, month-on-month output fell 6.2 per cent.