SINGAPORE - November saw Singapore’s manufacturing output soar for the fifth consecutive month, fueled by a remarkable surge in the electronics sector. Experts speculate that this increase may be linked to manufacturers preparing for potential tariff hikes in the United States under the incoming Trump administration.

In stark numbers, total factory output skyrocketed by 8.5% year-on-year, a significant leap from just a 1.2% rise recorded in October. However, this growth still fell short of economists' forecasts, which anticipated a robust 9.7% increase according to a Bloomberg poll.

When the more unpredictable biomedical sector is excluded from the calculations, output jumped by an impressive 13%. Analysts highlighted that demand for electronics continues to thrive, as the global semiconductor industry remains vibrant.

“Export demand for electronics is still strong, and exporters in China have been ‘front-loading’ their shipments to the U.S. to stock up inventory ahead of President-elect Donald Trump’s inauguration on January 20,” noted Ms. Yen Nee Lee, a senior country risk analyst at BMI. She expressed that this proactive approach is anticipated to boost the demand for intermediate goods from Singapore.

UOB economist Mr. Jester Koh added that the ongoing rise in the electronics cycle is being reinforced by this front-loading strategy, contributing positively to growth in trade-driven sectors, such as manufacturing, at least into early 2025.

The electronics industry, which constitutes nearly half of Singapore's manufacturing output, experienced a staggering 26.2% growth compared to the previous year. Within this sector, semiconductor output surged by 28.8%, while computer peripherals and data storage saw a 23.6% rise, and infocomms and consumer electronics experienced an 8.7% increase. However, not all sub-sectors thrived, as output of other electronic modules and components dipped by 6.5%.

On the other hand, precision engineering output showed a fractional increase of 0.6%, primarily driven by a 4.3% expansion in the machinery and systems segment due to heightened production of front-end semiconductor equipment. Yet, the precision modules and components segment faced a decline of 5.2%, largely due to decreased output of optical instruments and metal components.

Despite the encouraging numbers, experts remain cautious about the manufacturing landscape beyond early 2025. "Downside risks could arise from increased protectionism under Trump’s ‘America First’ policy, ongoing geopolitical tensions, a potential peak in the electronics cycle, and uncertainties regarding monetary easing by major central banks,” Mr. Koh stated.

Concerns extend to the semiconductor industry, with Barclays economist Brian Tan noting signs of fatigue in the cycle not only in Singapore but across Asia. “Should the semiconductor industry experience a downturn, GDP growth in 2025 could disappoint,” he warned, emphasizing that U.S. trade policy uncertainty may ramp up economic activity challenges regardless of when tariffs are announced.

In a concerning twist, other manufacturing sectors in Singapore didn't fare as well in November. Biomedical manufacturing output plummeted by 21.2% year-on-year, driven by a significant 37.1% decline in pharmaceuticals, which altered its mix of active ingredients compared to a year prior. However, the medical technology segment did witness a 5.8% increase, buoyed by strong export demand for medical devices.

General manufacturing output also dropped by 2.6%, with all segments suffering losses. Notably, the printing industries and food and beverage sectors reported declines of 1.4% and 1.7%, respectively, while the miscellaneous industries segment fell by 3.7%. Similarly, transport engineering dipped by 1.8%, weighed down by reductions in both land and marine sectors, which saw declines of 12.8% and 24.9%, respectively.

The aerospace segment stood as a beacon of hope, rising by a notable 20.9% mainly due to increased production in aircraft components and a rise in maintenance operations from commercial airlines.

While the chemicals sector saw an overall decline of 1.1%, segments within it displayed mixed results. Petroleum and petrochemical output rose by 11.3% and 1.1%, but the other chemicals sub-sector fell by 5%, with the specialties segment suffering a staggering 28% drop.

As the manufacturing landscape evolves, Singapore stands at a crossroads, balancing impressive current growth against an uncertain global economic outlook. Where will the winds shift next? Only time will tell!