Factory activity in Singapore likely bottomed out, slow rebound seen

Easing financial conditions to give factories reprieve next year.

Manufacturing activity in Singapore has likely hit bottom and is expected to make a gradual recovery towards the middle of 2024, according to UOB. 

UOB sees external demand for manufactured goods in the city-state to begin to slowly pick up next year on the back of an easing global financial environment. It said central banks in some advanced economies could even begin cutting interest rates as inflation slows down.

Latest industry survey showed that the Singapore manufacturing Purchasing Managers’ Index (PMI) expanded in the second month running in November at 50.3.

READ MORE: PMI edges up to 50.3 in November

Last month’s expansion was traced to improving electronics PMI, which rose for the first time after 15 months of consecutive contraction since July 2022. UOB noted the boost in global tech’s performance will support overall exports.

“In line with the improving manufacturing outlook, we expect the PMIs (especially electronics sector) to improve as well, although the near-term pace of increase may be curbed by external demand,” UOB said. 

Despite the outlook of manufacturing activity looking up, it cautioned that foreign demand could be affected by elevated interest rates continued in the US and Europe, while China’s prolonged property crash continues to dampen consumer and business sentiments.