CGS International
August 26, 2025
Singapore’s Manufacturing Sector Surges, but Tariff Risks Loom: In-Depth Analysis of July 2025 Performance

Overview: Robust Manufacturing Gains Amid Tariff Uncertainty

Singapore’s manufacturing sector delivered a strong performance in July 2025, with the Industrial Production Index (IPI) surging well past market expectations. Driven primarily by the electronics and transport engineering clusters, the sector posted broad-based gains despite growing concerns over US-imposed tariffs on semiconductor imports. CGS International maintains a cautiously optimistic outlook for the remainder of 2025, highlighting both the sector’s resilience and the elevated risks that lie ahead.

Key Highlights: July 2025 Manufacturing Performance

• Singapore’s IPI expanded by 7.1% year-on-year (YoY) in July 2025, outperforming market consensus (0.9%) and CGS International’s own estimate (2.2%).
• Growth was broad-based: All clusters registered output gains except for general manufacturing.
• Electronics cluster remained the main driver, surging 13.1% YoY, with semiconductors up 9.6% YoY.
• Transport engineering cluster also posted robust figures, growing 15.8% YoY, led by aerospace.
• General manufacturing contracted by 9.7% YoY, continuing its downward trend.
• Manufacturing PMI slipped to 49.9, indicating contraction, although the electronics PMI held at 50.2 (expansion).
• CGS International maintains its 2025 IPI forecast at 3.0% YoY due to persistent tariff uncertainty.

Cluster Performance: Growth Leaders and Laggards

Electronics Cluster: The Semiconductor Engine and Tariff Headwinds

The electronics cluster, accounting for 37.4% of total manufacturing, saw output jump 13.1% YoY in July, almost doubling its June growth. Semiconductors—making up 30.7% of the cluster—grew 9.6% YoY, supported by global demand for AI, data centers, and consumer electronics. However, the sector faces uncertainty after the US announced 100% tariffs on all chip imports, with exemptions for firms manufacturing in or moving operations to the US.
Other electronics segments showed divergent trends:

• Infocomms & Consumer Electronics soared 86.8% YoY in July, a sharp uptick from previous months.
• Computer Peripherals & Data Storage output declined by 4.2% YoY, continuing a negative streak.
• Other Electronic Modules or Components grew modestly at 1.9% YoY.

Transport Engineering: Aerospace Leads the Charge

Transport engineering (8.2% of manufacturing) climbed 15.8% YoY. Within this, aerospace output rocketed 22.7% YoY, fueled by rising demand for aircraft parts and continued maintenance, repair, and overhaul (MRO) activities from commercial airlines. Marine & Offshore Engineering rebounded to 11.7% YoY growth, while the land transport segment contracted by 23.2% YoY.

Biomedical Manufacturing: Growth Stalls

Biomedical manufacturing (14.1% of the sector) showed flat growth at just 0.2% YoY in July, after double-digit gains in June. Pharmaceuticals, the dominant sub-segment, managed only 2.7% YoY growth, while Medical Technology rose by 3.3% YoY.

Chemicals and Precision Engineering: Modest but Steady

Chemicals (17.8% of manufacturing) advanced 4.2% YoY, aided by specialties and other chemical products, both of which recorded robust growth. However, petrochemicals slipped by 1.3% YoY. Precision engineering (15.8%) maintained solid expansion at 9.6% YoY, with Machinery & Systems up 11.7%, offsetting weaker performance in Precision Modules & Components.

General Manufacturing: Continued Decline

General manufacturing’s contraction deepened, falling 9.7% YoY in July. Food, Beverages & Tobacco dropped 11.3% YoY, while printing output fell by 2.4%. Miscellaneous industries also declined by 8.2% YoY.

Sector Table: Detailed Cluster and Subcluster Performance

Sentiment and Forward-Looking Indicators

Despite the strong July showing, Singapore’s Manufacturing Purchasing Managers’ Index (PMI) dipped back into contraction at 49.9, reflecting persistent trade uncertainty. Electronics PMI, however, held at 50.2, signaling ongoing expansion. Business expectations for the next six months remain mixed, with firms expressing caution due to possible US tariffs but anticipating a seasonal pick-up in orders.

Macroeconomic Context: Singapore and Regional Trends

CGS International provided key macroeconomic forecasts for Singapore and its regional peers, covering GDP, inflation, unemployment, fiscal balance, and external accounts. For Singapore:

• 2025 GDP growth forecast: 1.6%
• Headline inflation (average): 1.0% in 2025
• Unemployment rate (end-2025): 2.0%
• Current account surplus remains high but is expected to moderate to 16.4% of GDP
• International reserves: Projected to rise to \$380 billion in 2025

Outlook: Steady Yet Cautious Amid Global Trade Risks

While July’s manufacturing results were highly encouraging, Singapore’s sector faces significant headwinds from external trade policy uncertainty. The imposition of US tariffs on semiconductors could dampen electronics growth, and with ongoing trade negotiations, downside risks persist. As a result, CGS International is maintaining a conservative IPI growth forecast of 3.0% for 2025.
Overall, Singapore’s manufacturing sector remains resilient, bolstered by strong electronics and aerospace demand, but it must navigate an increasingly complex and volatile global landscape in the months ahead.