Singapore’s factory output demonstrated a remarkable rebound in October, with a year-on-year growth of 7.4%, following a year-long slump. This positive shift surpassed market expectations, according to data released by the Singapore Economic Development Board (EDB) on November 24, 2023. The industrial production figure for September was revised to a 1.1% contraction from an earlier reported decline of 2.1%.

When excluding the often-volatile biomedical manufacturing sector, output still showed a robust growth of 7.3% year-on-year. Month-on-month, seasonally adjusted factory output increased by 9.8%, and by 4.4% when excluding biomedical manufacturing. Private-sector economists had anticipated a decline of 2.3%.

DBS economist Chua Han Teng commented on the recovery, noting, “We think that Singapore’s manufacturing recovery is underway, but will still have to watch for more data points to better gauge the pace of the upturn.”

Most industrial clusters reported growth, except for chemicals and precision engineering. The electronics sector was the standout performer, with output rising 14.8% year-on-year, building on September’s growth of 12.7%. This growth was primarily driven by the semiconductor segment, despite declines in other areas.

Barclays senior regional economist Brian Tan cautioned against overly optimistic interpretations of the electronics sector’s fluctuations, acknowledging its historical volatility. However, he noted that the current electronics production levels have returned to trend, aligning with a gradual regional upturn in the tech cycle.

Biomedical manufacturing also made a comeback, with output increasing by 5.1% year-on-year in October, a recovery from a significant 19% drop the previous month. Other clusters experiencing year-on-year growth included transport engineering (12%) and general manufacturing (4.3%).

Conversely, chemicals output fell by 1% in October, a slight improvement from the previous month’s 13% contraction, while the decline in precision engineering eased to 2.2%, compared to a 10.8% drop in September.

Despite these encouraging signs, DBS’ Chua cautioned that manufacturing activity remains uneven across sectors due to an uncertain global economic climate, marked by high interest rates in advanced economies, unstable conditions in China, and persistent geopolitical tensions that threaten supply chains. UOB economists projected that electronics exports might turn positive by December, driven by a narrowing contraction in October, but highlighted that external demand would likely continue to pose challenges in the first half of 2024.

RHB acting group chief economist Barnabas Gan, however, expressed optimism for improved manufacturing momentum in the next two quarters, attributing potential growth to stronger global trade and manufacturing trends already observed this year. Gan noted that Singapore could benefit significantly from China’s expected economic rec