Electronics Sector Sees Growth Amid Mixed Outlook for the Future
Singapore’s manufacturing output showed signs of improvement in September 2023, declining by only 2.1% year-on-year (YoY), a significant improvement compared to the 11.6% drop in August. This was primarily driven by a 10.2% growth in the electronics sector, which saw a rebound from previous declines, particularly in semiconductors, consumer electronics, and other electronics components. Despite the positive momentum, economists remain divided on whether the recovery in the electronics sector will be sustained.
Economists like RHB’s Barnabas Gan are optimistic about the electronics sector in the next 6-12 months, pointing to signs of a bottoming out in global semiconductor demand and a potential uptick in exports from ASEAN countries. They also note early signs of recovery in China’s economy, which could further support regional trade and manufacturing.
However, economists like Barclays’ Brian Tan and OCBC’s Selena Ling caution that the recovery in the electronics sector could be short-lived, as past growth has been volatile and brief, with a contraction following a positive month in July. Despite these mixed opinions, Singapore’s purchasing manager’s index (PMI) for September showed a slight improvement, suggesting a gradual recovery in manufacturing activity.
The overall manufacturing outlook is supported by strong performance in the transport engineering sector, which posted a 13.2% growth in output, with marine and aerospace engineering segments showing particular strength. However, other sectors such as biomedical manufacturing, chemicals, and precision engineering continued to experience significant declines.
On a seasonally adjusted monthly basis, manufacturing output increased by 10.7% in September, reversing the previous month’s decline. Year-to-date, overall manufacturing output is down 5.8%, with the biomedical cluster excluded. Economists remain cautiously optimistic, with some projecting positive growth for Singapore’s manufacturing sector by the end of 2023, and even more substantial growth in 2024.
