Singapore PMI edges up to 51.4 in July despite Middle East supply-chain pressures

Singapore's Purchasing Managers' Index (PMI) edged up 0.1 point to 51.4 in July, marking 12 straight months of expansion, according to data from the Singapore Institute of Purchasing and Materials Management (SIPMM). The electronics sector PMI rose 0.2 points to 52.4, its 14th consecutive month of expansion, driven by artificial intelligence-related demand. However, the Middle East crisis has intensified supply-chain pressures, sending input prices soaring and crippling supplier delivery times, as noted by SIPMM executive director Stephen Poh.

Singapore PMI edges up to 51.4 in July despite Middle East supply-chain pressures AI-driven semiconductor demand continues to support factory growth SINGAPORE The Republic’s factory activity expanded at a slightly faster pace in July, supported by the continuing artificial intelligence-related upcycle, even as the prolonged Middle East crisis intensified supply-chain pressures. The Purchasing Managers’ Index PMI edged up 0.1 point from June to 51.4 last month, data from the Singapore Institute of Purchasing and Materials Management SIPMM showed on Monday Aug 3 . This marks 12 straight months of expansion. 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 headline and electronics readings were their highest since November 2018 and January 2018, respectively, noted DBS senior economist Chua Han Teng. Stephen Poh, executive director of the SIPMM, said the latest readings indicate that Singapore’s manufacturing sector remains buoyed by the artificial intelligence-driven semiconductor supercycle, which is driving robust order inflows and employment. “However, the collapse of the Middle East ceasefire has triggered a supply chain crisis, sending input prices soaring and severely crippling supplier delivery times,” he added. Outlook Economists expect AI-related demand to continue supporting manufacturing in the near term, although its benefits may remain concentrated in electronics and related industries. Chua said these tailwinds had more than offset pressures from higher energy costs and US tariffs. “Strong hyperscaler investment in the second half of 2026 is expected to continue driving robust export demand for Singapore’s electronics products, including memory chips and server-related products,” he added. Separately, electronics new export orders rose to 52.6 in July, their highest since mid-2018. At the same time, the sector’s finished-goods index remained in contraction for a third consecutive month. UOB associate economist Jester Koh said this suggested that semiconductor demand was outpacing supply, with manufacturers drawing down inventories to meet rising orders. “This should continue to keep electronics manufacturing supported in the months ahead,” he said, although this would depend on manufacturers’ ability to expand production capacity. OCBC chief economist Selena Ling similarly said that rapidly declining stocks of finished goods, together with rising orders, pointed to a supply crunch rather than a lack of demand. However, she cautioned that conditions were more nuanced among industries not related to AI and electronics. The near-term outlook nevertheless remained positive. Ling noted that forward-looking business indices for both overall manufacturing and electronics remained in expansion, while Chua said this was corroborated by the Economic Development Board’s latest business expectations survey https://www.businesstimes.com.sg/singapore/economy-policy/singapore-manufacturers-services-remain-upbeat-six-month-outlook-despite-global-uncertainties . Still, supply and cost pressures could result in uneven factory performance over the coming months. Koh said supplier delivery readings deteriorated further in July as shipments were likely diverted from the Suez Canal and Bab el-Mandeb route, due to the re-escalation of the Middle East conflict, to the longer passage around the Cape of Good Hope. The rise in input costs was also more pronounced for overall manufacturing than electronics, reflecting higher energy prices alongside rising memory-chip prices, he added. Chua expects the chemicals cluster to continue to face headwinds in the third quarter, as Middle East tensions constrain feedstock supplies and limit any rebound in activity. Regional trends Manufacturing conditions across the region generally improved in July, with Indonesia returning to expansion, and Thailand and the Philippines reaching multi-month highs. China’s indicators weakened, while Malaysia’s growth held steady. China’s official PMI fell to 49.2 in July from 50.3 in June, slipping into contraction territory. The RatingDog China General Manufacturing PMI, a private index compiled by S&P Global, similarly eased to a four-month low of 50.9 from 51.7 in June. RatingDog founder Yao Yu said China’s manufacturing sector continued to expand in July, although growth in output and new orders moderated. New export orders returned to expansion for the first time in three months and employment continued to rise, he said, while cost pressures eased. “However, the reduction in purchasing activity and ongoing accumulation of input stocks warrant attention,” said Yao, adding that he expected more moderate growth ahead. Elsewhere in Asia, South Korea’s PMI rose to 53.1 in July from 52.1 in June. South-east Asian manufacturers also broadly reported stronger conditions. Indonesia returned to expansion as its PMI climbed sharply to 50.2 from 46.9, while Vietnam’s reading rose to 52.9 from 51.8. Thailand and the Philippines both reached multi-month highs. Thailand’s PMI rose to 54.2 from 53.6, its highest since December and well above its long-run average of 50.5. The Philippines’ PMI rose for a third straight month to a five-month high of 51.8, from 50.9 previously, signalling a modest improvement after subdued conditions between March and June. Malaysia’s PMI was unchanged at 50.7, remaining in expansion territory for the seventh time in nine months. Decoding Asia newsletter: your guide to navigating Asia in a new global order. Sign up here to get Decoding Asia newsletter. Delivered to your inbox. Free. Copyright SPH Media. All rights reserved. TRENDING NOW /pulse?ref=trending-now Temasek Financial launches 10-year fixed-rate Singapore dollar bond with initial price guidance of 2.7% DBS raises target price on Sheng Siong to S$3; expects earnings to ease once SG60 vouchers expire Yeoh Pei Xien: YTL’s third-gen scion with a pastor’s heart Philippines’ income upgrade hides grim reality for most Filipinos