Weaker PMI in July raises concerns over demand in the manufacturing sector

PMI edged down by 0.2 point to 50.1.

Could the manufacturing sector see a decline in demand? This was the question raised by experts as the Purchasing Managers’ Index (PMI) clocked in at a weaker 50.1 in July.

According to UOB Kay Hian, the decline in PMI was on the back of lower readings for new orders, exports orders, imports and inventory which raises concerns about the demand in the sector, particularly electronics. Aggravating this concern is the weaker global growth outlook, added UOB.

Data from the Singapore Institute of Purchasing and Materials Management (SIPMM) showed that new orders retreated to 50.2 from 50.7 in June, the lowest in 22 months.

New exports, factory output, inventory index, and imports index also posted lower readings of 50.5 (vs 50.8 in June), 50.1 (vs 50.2 in June), 50.0 (vs 50.1 in June), and 50.2 (vs 50.4 in June), respectively.

The electronic sector also showed similar easing trends, with its reading for new orders dropping to 51.2 from 51.6 last month, new exports declining to 51.3 from 51.7 in June, and electronics output decreasing to 50.2 from 50.3.

Apart from demand corners, UOB Kay Hian said the electronics sector is also facing cost pressures as implied by its elevated inputs prices index of 52.9.

Meanwhile, despite a decline in PMI, UOB Kay Hian maintained its manufacturing growth forecast at 4.5% in 2022 and full-year GDP estimate at 3.5%