Singapore factory sector expands 13.2% in 2021 with uplift from better-than-expected December output growth

SINGAPORE'S manufacturing sector grew by 13.2 per cent year on year in 2021, jumping from the 7.5 per cent expansion in 2020, according to fresh figures on Wednesday (Jan 26).

Full-year growth was driven by electronics and its adjacent precision engineering cluster, and supported by both the volatile pharmaceuticals cluster and a recovery in transport engineering.

The expansion was the biggest increase since production grew by 29.7 per cent in 2010.

Factory production closed the year with a bang, as industrial output added 15.6 per cent in December, surpassing economists' median forecast of 12 per cent in a Bloomberg poll.

Excluding biomedical manufacturing, factory output rose by 5 per cent year on year.

Electronics was the only cluster in the red in December, with the Economic Development Board attributing the 2.9 per cent fall to "the high production base a year ago".

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Noting that the contraction was the first since late 2020, Maybank Securities analysts Chua Hak Bin and Lee Ju Ye wrote in a note: "W e expect electronics manufacturing to continue expanding in 2022, but at a more subdued single-digit growth rate due to last year's high base and as semiconductors are already running near full capacity."

Still, full-year electronics output was up by 14.5 per cent in 2021, compared with the year before.

Otherwise, all industries closed the year with growth in production in December:

• Biomedical manufacturing (87.7 per cent)
• Transport engineering (40.8 per cent)
• Chemicals (1.2 per cent)
• Precision engineering (16.4 per cent)
• General manufacturing (7.7 per cent)

On a seasonally-adjusted monthly basis, industrial production increased by 4.3 per cent in December, but shrank by 1.1 per cent when biomedical manufacturing was excluded.

Economists now expect Singapore's full-year economic growth print to be revised upwards to 7.3 per cent for 2021, from official advance estimates of 7.2 per cent.

UOB economist Barnabas Gan added that the manufacturing outlook remains favourable, and has projected factory output growth to average 4 per cent in 2022. "This suggests that despite the high-base growth rate seen in 2021, global trade activity is expected to stay buoyant in the new year," he wrote.