The Republic's manufacturing sector bucked the regional trend again last month - negatively this time - but economists also read signs of improving external demand in the latest purchasing managers' index (PMI) report.
After several months of outperforming its Asian peers, Singapore's PMI headed in the opposite direction last month, falling to 50.5 from 51.8 in July. This disappointed market economists, who were expecting a slight rise, and followed news on Monday that China, Taiwan and South Korea all posted higher manufacturing PMIs.
But Singapore's manufacturing activity barometer, compiled monthly by the Singapore Institute of Purchasing and Materials Management from a survey of more than 150 industrial companies, stayed above 50, indicating growth.
It also remained higher than the readings for China, South Korea and Taiwan.
China's HSBC PMI rebounded to 50.1 after an 11-month low of 47.7 in July, mirroring its official PMI's rise to a 16-month high of 51 last month. Taiwan's PMI improved slightly to a reading of 50 last month, up from 48.6 in July, suggesting that operating conditions have stabilised.
For South Korea, despite improvement, the PMI stayed in contraction territory for a third month in a row with a reading of 47.5.
"PMIs are mostly up in the region. Since the biomedical and transport engineering industries are volatile industries with their own idiosyncratic product cycles, the overall manufacturing PMI in Singapore is unlikely to be in line with regional or global PMI trends," said Barclays economist Joey Chew.
Also, a fall in the PMI is not necessarily bad. The sub-indices show that Singapore's latest PMI fell because of a slowdown in production, as manufacturers drew down inventories that have been building up over the last few months.
"This is a healthy development," said Ms Chew.
In fact, coupled with a faster rise in new export orders, this "suggests stronger output and export ahead", she added.
The overall new export orders sub-index rose to 53.4, its highest reading since April 2011.
Demand for electronic exports was especially strong. The electronics new export orders sub-index rose to 54, its highest reading since May 2011, pushing the electronics sector PMI to a three-month high of 51.3.
OCBC economist Selena Ling said: "This suggests the domestic electronics recovery story also remains intact, and could lend some near-term support to offset the volatility of the biomedical cluster."
She too believes that external demand is picking up, in line with improvement seen in the global manufacturing PMI readings for the US, eurozone and Japan, in addition to China's.
With more signs of stabilisation in Asia's largest economy, the risks of a growth slowdown in China on Singapore have also been reduced, says Ms Chew. In her view, the key external risks for Singapore now stem from the US Federal Reserve's tapering of its quantitative easing programme and the impact that would have on emerging markets.
"Although Singapore is less vulnerable to direct impact - capital flight, currency depreciation - we are still susceptible to indirect effect, for example through Indonesia, given our open, trade-dependent economy," said Ms Chew.
On balance, the manufacturing sector is likely to manage only a "very modest recovery" for the full year, said Ms Ling.
The latest production data from the Economic Development Board shows that factory output rose 2.7 per cent year on year in July, thanks mainly to a 3.5 per cent jump in electronics production.
However, industrial output for the first seven months of 2013 was 1.6 per cent lower than that produced in the same period last year. Electronics output, in particular, was 3 per cent lower over the seven- month period.