SINGAPORE – Singapore’s manufacturing recession worsened in March as production shrank for the sixth straight month, according to data released by the Economic Development Board on Wednesday.

The Bloomberg consensus forecast stood at minus 6.1 per cent year on year.

Factory output fell 4.2 per cent year on year in March, after falling 8.9 per cent in February.

Excluding biomedical manufacturing, output fell 6 per cent.

On a three-month moving average basis, manufacturing output decreased 5.6 per cent in March, compared with a year ago.

March’s industrial production was weighed by declines in electronics, chemicals, precision engineering and general manufacturing industries, while biomedical manufacturing output rebounded by 7 per cent year on year after crashing heavily by 34.1 per cent in February, UOB senior economist Alvin Liew said.

The better performance in biomedical manufacturing output was solely due to an 18 per cent year-on-year rise in medical technology as the volatile pharmaceuticals output fell by 1 per cent year on year, following a sharp 59.3 per cent year-on-year plunge in February, Mr Liew noted.

Besides medical technology, the other bright spots include transport engineering output and marine and offshore engineering, helping to partly offset an otherwise much deeper manufacturing contraction, he said.

“Notwithstanding the uplift brought by the biomedical technology and transport engineering components, the latest March industrial production print continues to affirm our downbeat manufacturing outlook due to the worsening electronics down cycle and weaker external demand. We maintain our forecast for Singapore 2023 manufacturing to contract by 5.4 per cent,” he added.

By cluster, transport engineering saw the largest increase in output, at 23.5 per cent year on year in March.

The marine and offshore engineering segment expanded 48.4 per cent, supported by a higher level of activities in shipyards as well as increased production of oil and gas field equipment.

This was followed by the biomedical manufacturing cluster, which saw output increase 7 per cent year on year.

The medical technology segment grew 18 per cent, with higher export demand for medical devices.

In contrast, output of the pharmaceuticals segment decreased 1 per cent, on account of a different mix of active pharmaceutical ingredients being produced compared with a year ago.

The chemicals cluster saw the steepest contraction of 11.8 per cent in March on a year-on-year basis.

The petroleum segment grew 12.5 per cent on account of higher demand for jet fuel as air travel continued to rise.

Conversely, the specialities segment contracted 6.5 per cent due to lower production of mineral oil and food additives, while the other chemicals segment declined 14.3 per cent due to lower output of fragrances.

Output for the petrochemicals segment fell 20.3 per cent on the back of weak market demand and plant maintenance shutdowns. 

Ms Selena Ling, chief economist and head of treasury research and strategy at OCBC Bank, said: “For the full year 2023, manufacturing output is still likely to contract marginally compared to 2022. (Thus), there is still a risk of a technical recession for the Singapore economy, even though an outright recession for the full year 2023 looks less likely if there is a moderate recovery in the global electronics cycle in the second half of 2023.”