SINGAPORE (Nikkei Markets) -- Output from Singapore's factories grew above expectations in April as demand extended to include a range of goods from semiconductors and chemicals to pharmaceuticals.
Despite the show of resilience, especially in electronics manufacturing, economists held to the view that growth would slow in the months ahead.
The major risk is the likelihood of more protectionist policies from the U.S., which could hit trade. As for the global chip industry, many expect growth there to moderate.
In a note a few days ago, DBS Group Research said that globally, growth in shipments of electronics is flattening out while billing growth is declining, essentially pointing to a slower pace of expansion for Singapore's manufacturing sector in the months ahead.
According to the Economic Development Board, manufacturing output in the city-state increased 9.1% in April from a year ago. That compares with the upwardly revised 6.1% growth recorded in March. Estimates for April ranged around 8%.
Production of electronics rose 11.3% on year, slower than March's 12.6% pace. Semiconductors and computer peripherals powered output in April while production in other segments such as data storage and consumer electronics and information-communications declined.
On a seasonally adjusted month-on-month basis, manufacturing output rose by 0.2% in April.
Output of chemicals increased 12.4% while the volatile biomedical cluster returned to growth after a two-month contraction, with production of pharmaceuticals rising 10.7% on year.
"The robust April manufacturing data suggest the growth momentum in the first quarter may extend to the second. Electronics output growth is easing at a more benign pace than we previously expected," Maybank Kim Eng economists Chua Hak Bin and Lee Ju Ye said in a note.
Singapore's economy grew 3.6% in 2017, the fastest pace in three years, powered by demand for electronics items as sales of smartphones and other devices ballooned.
Just a day ago, the Ministry of Trade and Industry announced first-quarter data that showed growth edging past its initial estimate, again led by the manufacturing sector.
However, there are some signs of a slowdown. United Overseas Bank pointed to exports of electronics products, which fell 6.9% last month, the fifth consecutive month of decline. There is no reason to keep producing these products, which are intermediate goods, without exporting them, Francis Tan, an economist with UOB, said.
"For now, we remain cautious," Tan said, adding that he is maintaining his forecast for factory output to grow 4.4% this year as against the 10.1% growth recorded last year.
Maybank Kim Eng economists said they expect the manufacturing slowdown to become more apparent in the third quarter, aggravated by the high base of last year.