[SINGAPORE] The Republic’s manufacturing sector slipped back into contraction in July, even as the key electronics segment continued to expand.
The purchasing managers’ index (PMI) fell to 49.9, a 0.1 point dip from June, according to data released on Friday (Aug 1) by the Singapore Institute of Purchasing and Materials Management (SIPMM).
A reading of 50 and above indicates expansion, while one below 50 indicates decline.
In contrast, the linchpin electronics sector continued to gain ground, with its PMI inching up 0.1 point to 50.2, marking a second consecutive month of growth.
Commenting on the overall manufacturing performance, SIPMM executive director Stephen Poh said: “Anecdotal evidence suggests that local manufacturers remained concerned about the uncertain global trade policy and tariffs, and many companies have held back their investment and hiring plans.”
The report attributed the electronics sector’s improved showing to a faster pace of expansion in new orders, new exports, factory output and input purchases.
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DBS senior economist Chua Han Teng said the divergence between the manufacturing and electronics PMIs “reflects the prevailing heightened uncertainty in the external environment, amid the ongoing US tariff roller coaster”.
The direct impact on Singapore will likely be contained, given that its tariff rate may remain unchanged at 10 per cent, he said.
But the city-state’s exports and economy could still face indirect negative effects through trade linkages with key partners, he added.
OCBC chief economist Selena Ling similarly cautioned that front-loading effects may soon taper off, with “potential implications for external orders and global supply chain recalibration”.
She expects this dissipation to take place in the second half of the year, potentially slowing manufacturing momentum.
On the electronics sector, both economists noted that it remains vulnerable to potential US levies.
Ling said that the imposition of sectoral tariffs on semiconductors and other electronics goods could weigh on the growth trajectory.
Regional trends
Singapore’s readings were part of a regional picture of manufacturing weakness.
China’s official PMI dropped to 49.3 in July from 49.7 the month before. This suggests a likely slowdown in growth momentum at the start of Q3, as the effects of export front-loading and fiscal stimulus wane, said Barclays economists Zhou Yingke, Zhang Ying and Chang Jian.
China’s Caixin PMI, which tracks smaller private manufacturers, has been discontinued, with the June reading of 50.4 being the final one.
PMI readings for both Indonesia and Malaysia improved, but remained in contraction territory. Indonesia’s PMI rose to 49.2 from 46.9, while Malaysia’s climbed to 49.7 in July, up from 49.3 in June.
But Thailand extended its expansion streak for a third straight month, with its PMI rising 0.2 point to 51.9.
