A Look at Economic Events in and Around Singapore

Every week I take a look at the latest news that is going on in or around Singapore. After going through last week the growth of Singapore’s economy in the first quarter of 2014, this time I’ll be taking a closer look at each specific cluster within our country’s manufacturing activity to see how they have fared for April.

Slowdown in growth for manufacturing output

According to data released by Singapore’s Economic Development Board (EDB) last Monday, Singapore’s manufacturing output had managed to grow by 4.6% in April this year. The latest rate of growth for manufacturing output is a big decline over the 12.1% growth rate experienced in March. In addition, the 4.6% figure is also lower than the 6.5% expansion that analysts polled by Reuters were expecting.

Cluster April 2014
(year-on-year % gain)
March 2014
(year-on-year % gain)
Difference (%)
Biomedical 23.8 16.4 7.4
Chemicals 8.9 5.2 3.7
Electronics -8.8 8.7 -17.5
General Manufacturing 0.8 1.0 -0.2
Precision Manufacturing 4.2 4.3 -0.1
Transport Engineering 3.5 29.4 -25.9

Source: Economic Development Board

Based on the table above, we can see that the biomedical cluster has continued its strong performance by growing 23.8% in April. Another strong contributor had been the chemicals cluster, which saw an 8.9% growth in output. A notable 19.2% expansion in the petrochemicals segment had helped propel the chemicals cluster as plants “ramp up production on the back of expanded capacities.”

Elsewhere, the electronics cluster suffered an 8.8% contraction in output, a big swing from the 8.7% growth rate the cluster had enjoyed in March. The drop is mainly attributable to an 11% fall in output from the semiconductors segment.

Another cluster which experienced a drastic fall is Transport Engineering. Despite growing by 3.5% in April, it was a far cry from the 25.9% gain it had experienced in March. That said, there is no real reason for panic as the slowdown in growth was due to the exceedingly high 45.1% growth rate attained by the marine & offshore engineering segment in March. As it so happens, March had seen several rig building and ship building projects achieve milestone completion.

Foolish Takeaway

In Channel NewsAsia’s report on Singapore’s manufacturing output for April, the article had stated that economists are of opinion that “Singapore’s electronics sector may continue to weigh on overall industrial production in the coming months.” If that holds true, companies within the sector, such as Datapulse Technology (SGX: D04) and Serial Systems (SGX: S69), may be facing some headwinds ahead.

For investors who would like more growth-flavour, the biomedical cluster has been growing fast. Companies within that space include Biosensors International Group (SGX: B20) and QT Vascular (SGX: 5I0). The former is a maker of stents – medical devices used to unclog blocked arteries – and an established player in the biomedical field. The latter, meanwhile, designs, assembles, and distributes therapeutic solutions for minimally invasive treatment of complex vascular diseases. QT Vascular just got listed in late April this year at a price of S$0.28 and since then, has gained 61% to its current price of S$0.45.

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The information provided is for general information purposes only and is not intended to be personalised investment or financial advice. Motley Fool Singapore contributor James Yeo doesn’t own shares in any companies mentioned.