SINGAPORE — Factory output expanded for the third consecutive month in August as activity in the electronics and biomedical clusters quickened, but economists cautioned that the data were merely lifted by a low base last year and the near-term outlook for Singapore’s manufacturing economy remains choppy.

Manufacturing output expanded by 4.2 per cent last month from the same period a year earlier, extending the 3 per cent growth seen in July, Economic Development Board (EDB) data showed yesterday. However, it came in lower than the 5 per cent forecast in a Reuters’ poll.

On a seasonally adjusted month-on-month basis, manufacturing output declined 0.2 per cent, after July’s 2.4 per cent sequential growth.

“In other words, we’re not seeing clear signs of firmer recovery at all. Instead, the manufacturing outlook remains tepid, weighed down by uncertainties in the global environment,” DBS economist Irvin Seah said. “Despite better on-year numbers, across all key industries, we see moderation (in output growth). Electronics’ growth in August was only due to last year’s lower base, and biomedical has also eased after July’s bump.”

The electronics cluster — which accounts for about one-third of manufacturing — rose by 7.2 per cent, the first expansion since March. However, economists cautioned, the growth should be read cautiously, as the improved performance was due partly to a low base in August last year, when the cluster grew by 5.3 per cent, the second-lowest reading that year.

The sector’s mixed performance came as the Purchasing Managers Index (PMI) in the United States reached the highest in four years at 57.9, suggesting an improving consumer sentiment and manufacturing activity.

But Mr Seah said external conditions are not yet on a firm recovery track.

“The US PMI number is the only positive reading; it fell in both the eurozone and China recently. The eurozone is now, in fact, tipping towards deflation, while China’s manufacturing remains relatively sluggish,” he said.

This will probably impact the biomedical cluster, another key manufacturing sector, UOB economist Francis Tan cautioned.

“A lot of our biomedical products are exported to the eurozone, which is now adopting a looser monetary policy. This will cause the euro to continue to decline against the Singapore dollar, which may hurt our biomedical industry,” he said.

Last month, biomedical output, which accounts for 17.7 per cent of manufacturing, slowed to 9.7 per cent from July’s 26.6 per cent. This was because of pharmaceuticals’ lower growth at 7.5 per cent, also down from July’s 28.3 per cent.

Meanwhile, transport engineering output dropped 0.8 per cent on-year, but marine and offshore engineering recovered from July’s 9.1 per cent decline to grow 9.1 per cent in August.

“The overall manufacturing outlook over the next few months is wrought with uncertainty. The electronics cluster, for instance, will be pressured by a very high base between September and December last year, so whatever growth comes in the better year-end festive season, demand will be limited,” Mr Tan said.

Similarly downbeat, DBS’ Mr Seah said: “Considering the outlook, we are forecasting a 3 per cent full-year gross domestic product growth, below the consensus forecast of 3.3 per cent — which the market is likely to adjust downward going forward.”