SINGAPORE - Manufacturing output rose 12.6 per cent in December from the same month a year earlier, topping expectations and suggesting that Singapore's trade-dependent economy is showing resilience in the face of Europe's sovereign debt crisis.

The solid manufacturing data may lead to a stronger reading on gross domestic product (GDP). Preliminary data showed GDP shrank 4.9 per cent on quarter in seasonally-adjusted annualised terms in the October-to-December period.

That number may be revised upwards when the Government reports revised GDP data next month, taking into account the manufacturing output, said Credit Suisse economist Wu Kun Lung.

December's output rise was driven by a surge in production in the pharmaceutical industry and reversed a revised 8 per cent drop in November, the Economic Development Board said yesterday.

The increase beat all estimates in a poll of 12 economists by Dow Jones Newswires, which pointed to a median 7.3 per cent rise.

Output in the biomedical sector, which accounts for a fifth of total manufacturing production, surged 111.6 per cent last month from a year earlier, boosted by the 121.6 per cent expansion in pharmaceuticals.

Electronics output, which accounts for almost a third of total factory production, fell 22.8 per cent on year.

Compared with the previous month, production expanded a seasonally adjusted 7.8 per cent, after falling a revised 24.5 per cent in November. The median forecast of eight economists in the same poll was for a 3 per cent expansion.

For the whole of last year, manufacturing output rose 7.6 per cent.

Barclays Capital economist Leong Wai Ho said: "Economic growth seems to be doing all right and the shockwaves from Europe have not been as severe as the Monetary Authority of Singapore (MAS) had initially estimated. For now, we think that the MAS will focus on taming inflation".

The output data vindicates the central bank's decision in October to loosen monetary policy only marginally to help Singapore's economy tide over the crisis in Europe, its biggest trading partner.

But while data released on Wednesday showed inflation eased to 5.5 per cent last month from 5.7 per cent in November, the reading was likely still above the central bank's comfort zone.