Singapore’s factory activity sees positive growth after six months

Illustrative photo (Photo: Xinhua/VNA)

Singapore (VNA) – Singapore’s factory activity grew for the first time in six months, signalling that the slump in manufacturing may have bottomed out, even as the electronics industry continued to show contraction, according to the Singapore Institute of Purchasing and Materials Management.

The Purchasing Managers’ index (PMI), a barometer of the manufacturing sector, nudged higher to 50.1 points in September, up from 49.9 points in the previous month.

An PMI below 50 indicates contraction, whereas those above 50 points denote growth. This expansion was helped by the broad-based improvement, albeit a marginal one, across a raft of key indicators such as new exports, imports, output, inventory and order backlog, and particularly the increase of the employment index after a 7-month contraction.

However, according to some experts, headwinds in Singapore’s manufacturing sector remain, given the weak external demand that could persist for the rest of 2023, exacerbated by tight financial conditions stemming from an elevated interest rate environment.

Besides the high-interest rates in advanced economies, China’s post-pandemic bumpy recovery and lingering geopolitical tensions could still disrupt supply chains.

For the electronics segment, the latest PMI data pointed to a further shrinkage, despite improving by 0.3 points to 49.8 from a month earlier.

Meanwhile, the increase in input prices may be due to the recent increase in global crude oil prices because Russia and Saudi Arabia announced production cuts, which also had a significant impact on Singapore's production activities.

Economic experts expect a gradual recovery in Singapore's manufacturing sector in the final months of the year, an improvement in the order backlog generally denotes brightening prospects for the sector. Supply and demand are gradually balanced, creating a premise for the country's production growth in the coming year./.