Industrial production to weaken in H2 amidst expected front-loading backlash

Industrial production was up 8% year-on-year in June.

Singapore’s resilient growth in the first half of the year could potentially weaken in H2 2025 as backlash from front-loading activities comes to roost, according to a report by UOB.

UOB, however, noted that the ‘payback’ could be more pronounced in trade-related services like wholesale trade and transport & storage, rather than manufacturing, with further drag in these sectors likely stemming from weaker demand due to the tariffs themselves.

Singapore’s industrial production (IP) was flat in Jun on a month-on-month (MoM) sa basis, translating to a year-on-year (YoY) increase of 8% (May revised: 3.6% y/y).

Pharmaceuticals grew the most at 43.7% MoM. UOB estimates it may be due to front-loading ahead of the potential Section 232 tariffs, but UOB said it is difficult to tell given the volatility of pharma IP.

Excluding biomedical output, on a MoM sa basis, IP contracted by -0.8% in Jun. Electronics IP remained soft, weighed down by semiconductors. Precision engineering was a bright spot led by expansions in both machinery & systems and precision modules & components, although partly offset by a weaker outturn in transport engineering.

Overall, H1 2025 manufacturing growth is likely to be maintained at 5% YoY, in line with advance estimates.