SINGAPORE’S overall manufacturing sentiment improved in July, as region-wide factory activity continued to grow.
The purchasing managers’ index (PMI) expanded at a faster pace to post a reading of 50.7 last month, a 0.3 point gain from June, according to the Singapore Institute of Purchasing and Materials Management (SIPMM) on Friday (Aug 2). This is also the 11th straight month it remained in expansion territory.
A reading above 50 on the index indicates growth from the previous month, while one below 50 points to a contraction.
In contrast, the linchpin electronics sector dipped 0.2 point, posting a slower expansion at 51 in July – though it stayed in expansion territory for the ninth straight month.
As OCBC chief economist Selena Ling sees it, the recovery of the electronics sector “still has legs to run” though its strength may be “slightly patchy, rather than broad-based”.
This is in line with the recent business expectations survey for manufacturing, she noted. While 40 per cent of electronics firms polled anticipate an improved outlook for the second half of this year, their optimism was led by the semiconductor industry, followed by computer peripherals and data storage.
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Conversely, sentiment for the infocomms and consumer electronics industry is still flattish, said Ling.
Despite the pullback in the electronics PMI, UOB associate economist Jester Koh remains optimistic about recovery prospects for electronics industrial production.
He expects the sequential momentum “to strengthen more meaningfully” in the fourth quarter of 2024 and into 2025. This is assuming major central banks in advanced economies continue to lower policy rates, he said, which could stimulate investment and consumption activity abroad.
He also sees the eventual replenishment of inventory, coupled with the ongoing replacement of worn-out or outdated consumer electronics acquired during the pandemic, as positive tailwinds for the electronics segment.
Most regional economies reported improvement in operating conditions, with some notable exceptions.
China’s official manufacturing PMI dipped 0.1 point to 49.4 in July, extending its contraction run to the third straight month. The Caixin PMI, derived from smaller private manufacturers, entered contraction territory for the first time in nine months. It slipped two points to 49.8 in July and missed analysts’ forecasts of 51.5.
Closer to home, Malaysia’s Global Malaysia Manufacturing PMI hit a three-month low, dropping 0.2 point to stay in contraction territory at 49.7.
On the other hand, Thailand’s S&P Global Manufacturing PMI rose to a 13-month high of 52.8, up from June’s 51.7. In Vietnam, the S&P Global Manufacturing PMI was unchanged at 54.7 for the month.
Both South Korea and Taiwan remained in expansion territory. South Korea’s S&P Global Manufacturing PMI dipped 0.6 point to 51.4 in July, while Taiwan’s S&P Global Manufacturing PMI fell marginally to 52.9.
