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Singapore's manufacturing sector extends growth on AI demand

The Purchasing Managers’ Index (PMI) edged up 0.1 point from June to 51.4 last month, marking 12 straight months of expansion.

The demand for AI is a major driver of Singapore's manufacturing sector. (Illustrative photo: VNA)
The demand for AI is a major driver of Singapore's manufacturing sector. (Illustrative photo: VNA)

Singapore (VNA) – Singapore’s manufacturing sector continued to expand in July despite prolonged tensions in the Middle East that have added pressure to global supply chains, with demand driven by artificial intelligence (AI) remaining the key growth engine, particularly in the semiconductor and electronics industries.

The Purchasing Managers’ Index (PMI) edged up 0.1 point from June to 51.4 last month, marking 12 straight months of expansion, data from the Singapore Institute of Purchasing and Materials Management (SIPMM) showed on August 3.

A reading above 50 indicates expansion while one below 50 indicates decline.

Within manufacturing, the PMI for the linchpin electronics sector grew by 0.2 points to 52.4, marking the 14th consecutive month of expansion.

The sector's new export orders index climbed to 52.6 in July, its highest level since mid-2018. Meanwhile, the finished goods index remained in contraction for a third straight month, indicating inventories continued to be kept lean.

Economists noted that both the headline manufacturing PMI and the electronics PMI reached their highest levels since November 2018 and January 2018, respectively.

The latest data suggest Singapore's manufacturing sector continues to benefit from the semiconductor "supercycle", fuelled by rising investment in AI. Strong demand for chips and electronic components has boosted new orders while supporting hiring across the manufacturing sector.

Economists expect AI-related demand to remain the main driver of manufacturing growth in the near term although the benefits are likely to remain concentrated in electronics and related industries. The momentum has largely offset headwinds from higher energy costs and US tariff policies.

Robust investment by hyperscale cloud service providers in the second half of 2026 is expected to further drive demand for Singapore-made electronics products, including memory chips and server-related components./.

VNA
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