PMI expands for the 13th straight month at 51 in July

Analysts say the manufacturing industry will be relatively unscathed from the tighter social restriction measures.

The Purchasing Manger’s Index (PMI) expanded for the 13th straight month, at 51 in July, the highest reading since December 2018.

Electronics sector PMI increased by 0.2 points to 50.8, marking a full year of expansion.

The PMI measures the strength of the manufacturing sector, by polling over 200 purchasing managers. Production output, new orders, supplier deliveries, inventory, and employment are all factored into the computation.

A PMI of over 50 indicates an expansion compared to the month previous, while a PMI under 50 indicates a contraction.

“Despite the tighter social restriction measures, we see a little negative impact on Singapore’s manufacturing landscape... Importantly, Singapore’s manufacturing environment had been relatively unscathed from the previous Phase Two (HA) which ended on 14 June, given the expansion seen in both non-oil domestic exports (NODX) and industrial production,” said UOB Global Economics & Markets Research economist Barnabas Gan.

“At this juncture, Singapore’s manufacturing and electronics sectors remain fairly resilient and should continue to provide a key pillar of support for near-term growth. While the domestic manufacturing sector is likely to see a moderation to single-digit growth rates in the second half of 2021 as the low base effects subside, full-year 2021 manufacturing growth is still likely to exceed 10% year-on-year (YoY), and this, in turn, should support 2021 GDP growth minimally at the 6% YoY handle,” said OCBC Treasury Research Head of Research and Strategy Selena Ling.