[SINGAPORE] Manufacturing output in March fell 3.4 per cent year-on-year, data released yesterday by the Economic Development Board (EDB) showed, though the decline was not as much as expected.
The transport engineering sector was a star performer and expanded 20.8 per cent, but electronics output declined by 15.9 per cent.
For Q1, manufacturing output dipped one per cent year-on-year.
Analysts viewed the numbers positively and expect Q1 GDP growth to be between 1.7 and 1.9 per cent, up from the previous estimate of 1.6 per cent. They said a possible electronics rebound in Q2 could lift the numbers.
"A year-on-year contraction was widely expected due to a high base caused by a jump in output in the biomedical and precision-engineering sectors last March," said Barclays Capital economist Leong Wai Ho.
"But on a seasonally adjusted, month-on-month basis ... the improvement was broad based," he said.
After seasonal adjustments, manufacturing output grew 2.7 per cent in March from February.
Mr Leong and OCBC economist Selena Ling pointed to the North American semiconductor book-to-bill ratio of 1.13 in March, which means that $113 of orders were received for every $100 of products billed.
The ratio is at a 19-month high after staying below 1.0 from October 2010 to January 2012.
This indicates that demand for Singapore's semiconductors could start to pick up, said Mr Leong.
For the rest of the electronics cluster, data storage continued to be a bright spot, with output rising 32.3 per cent in March year-on-year after a 79.6 per cent jump in February. EDB said this was due to a recovery from the supply chain disruptions caused by the Thailand floods last October.
The biomedical-manufacturing, chemicals and precision-engineering clusters all posted year-on-year output contractions. Pharmaceutical output fell 6.3 per cent owing to changes in product mix, said EDB.
But the general manufacturing cluster grew 4.1 per cent on higher demand for structural metal products and wooden furniture, as well as higher food, beverages and tobacco output.
Meanwhile, the transport-engineering cluster was boosted by a 23.2 per cent increase in aerospace output and a 22.1 per cent increase in marine and offshore engineering output.
This was due to strong demand for airline maintenance and repair jobs, as well as increased activities in rig-building, ship-conversion and higher production of oil field equipment, said EDB.
After a one per cent dip in manufacturing output for Q1 year-on-year, analysts said the sector will see an uneven recovery in Q2.
Citigroup economist Kit Wei Zheng said that while there could be bumps caused by a slowdown in US and China GDP growth, "electronics restocking ... evident in production still falling behind exports, will cushion Singapore GDP growth".
But Credit Suisse economist Robert Prior-Wandesforde said Q1 might be "as good as it gets" where growth is concerned for trade-dependent economies such as Singapore.
"The US economy is looking as though it is entering another soft patch, the eurozone is once more in trouble and China and India are unlikely to experience a strong improvement in domestic demand in 2012," he said.