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Business Times
02-07-2025
- Business
- Business Times
Singapore's PMI rebounds to expansion territory in June amid improving regional activity
[SINGAPORE] Singapore's overall factory activity returned to expansion territory in June after two straight months of contraction, data from the Singapore Institute of Purchasing and Materials Management (SIPMM) showed on Wednesday (Jul 2). The purchasing managers' index (PMI) expanded marginally last month, by 0.3 point to 50. A reading above 50 on the index indicates growth from the previous month, while one below 50 points to a contraction. Similarly, the linchpin electronics sector edged up 0.2 point from the previous month to record an expansion at 50.1 in June, after two straight months of contraction. SIPMM executive director Stephen Poh said: 'It is heartening to note that the manufacturing sector has reverted to an expansion going into the second half of the year, albeit trade uncertainties remain in the global economic environment.' However, he also acknowledged that local manufacturers are concerned about 'the rapidly shifting landscape of global trade policy and tariffs, resulting in supply chain fragmentation'. Selena Ling, chief economist at OCBC, said the improvements in Singapore's manufacturing and electronics PMIs suggest that 'market sentiments and business confidence levels have stabilised somewhat' since the April announcement of US reciprocal tariffs and the ensuing market volatility. BT in your inbox Start and end each day with the latest news stories and analyses delivered straight to your inbox. Sign Up Sign Up 'The June PMI readings illustrate a semblance of a return to some normalcy, likely underpinned by hopes' the US will strike more trade deals or truces, as it did with the UK and China, she added. However, she also pointed out that front-loading efforts 'may largely be spent' as the end of the 90-day pause on US reciprocal tariffs approaches. 'There are some tentative signs that business momentum may cool in the coming months once the tariff realities kick in, and the 10 per cent universal tariffs look likely to stay intact.' UOB associate economist Jester Koh likewise said the June readings likely reflect 'better sentiment, driven by hopes of a durable trade and tariff de-escalation following the two-day US-China negotiations in London', as well as near-term front-loading momentum. But he warned that the payback from earlier front-loading could lead to a 'more protracted downturn' in manufacturing and trade activity in H2 2025, cushioned partly by less cyclical demand for data storage and spillover effects into consumer electronics. Though most remained in contraction, some regional economies picked up in June. China's official manufacturing PMI contracted for a third straight month, albeit at a slower pace, posting a reading of 49.7 in June compared to 49.5 in May. Surprisingly, the Caixin PMI, derived from smaller private manufacturers, rose to 50.4 from 48.3. Both South Korea and Malaysia remained in contraction territory despite improvements. South Korea's S&P Global manufacturing PMI rose to 48.7 in June from 47.7 in May, while that of Malaysia was 49.3 in June, up from 48.8 the month before. Taiwan's S&P Global manufacturing PMI, meanwhile, registered its steepest decline in one-and-a-half years – it slid to 47.2 in June, from 48.6 in May. Vietnam's S&P Global manufacturing PMI also fell in June, to 48.9 from 49.8 the previous month.

Straits Times
02-07-2025
- Business
- Straits Times
Singapore factory activity ticks up to end two-month contraction as US tariffs loom
Sign up now: Get ST's newsletters delivered to your inbox Manufacturing activity staged a modest rebound in June but uncertainty prevails with a reprieve on Trump's global tariffs set to end next week. SINGAPORE - Manufacturing activity in Singapore staged a modest rebound in June after languishing in contraction territory for two straight months, but uncertainty prevails with a reprieve on US President Donald Trump's global tariffs set to end next week. Singapore's purchasing managers' index (PMI), a barometer of the manufacturing sector's health, edged up from 47 points in May to 50 in June, with readings above that level indicating expansion. 'It is heartening to note that the manufacturing sector has reverted to an expansion going into the second half of the year, albeit trade uncertainties remain in the global economic environment,' said Mr Stephen Poh, executive director of the Singapore Institute of Purchasing and Materials Management (SIPMM). Despite the PMI rise, Mr Poh said: 'Anecdotal evidence suggests that local manufacturers are concerned about the rapidly shifting landscape of global trade policy and tariffs, resulting in supply chain fragmentation.' SIPMM is a professional body that gathers and compiles PMI data monthly through surveys of logistics, procurement and supply chain management professionals. In May, it said Singapore manufacturers were facing a wave of export-order deferments and cancellations from foreign buyers hit by Mr Trump's reciprocal tariffs announced in April. While front-loading of orders by traders trying to get ahead of the tariffs propped up manufacturing and exports for a while in 2025, the exports and output data for May showed that support had started to wither. Top stories Swipe. Select. Stay informed. Singapore Singapore and Cambodia to expand collaboration in renewable energy, carbon markets and agri-trade Singapore Ong Beng Seng's court hearing rescheduled one day before he was expected to plead guilty Singapore ByteDance food poisoning: Catering firm convicted after cockroach infestation found on premises Singapore Three hair salons raided in clampdown on touting, vice, drugs in Geylang and Joo Chiat Singapore The romance continues: Former 'Singapore girl', 77, returns to Osaka Expo after 55 years Singapore Granddaughter of Hin Leong founder O.K. Lim fails to keep 3 insurance policies from creditors' reach Singapore Man on trial for raping drunken woman after offering to drive her and her friend home Singapore 3 weeks' jail for man who touched himself on train, flicked bodily fluid on female passenger Factory output in May rose 3.9 per cent year on year, but this was a slowdown from April's 5.6 per cent gain and March's 6.9 per cent growth. In May, also, non-oil domestic exports slid 3.5 per cent year on year, reversing a 12.4 per cent rise in April. SIPMM said the latest PMI reading was attributed to an expansion in new orders, a faster expansion rate in new exports and input purchases, and a slower contraction rate of factory output and employment. It said the imports index posted a faster expansion rate, whereas a slower expansion rate was recorded for supplier deliveries, finished goods and order backlog. The input prices index reverted to an expansion, while the future business index posted a faster contraction. The electronics sector PMI also increased in June after contracting for two months. It rose by 0.2 point from the previous month to 50.1 points. SIPMM said the latest reading for the electronics sector PMI was supported by a faster expansion rate in sub-indexes of new orders, new exports and input purchases. Factory output resumed expansion, and employment in the sector posted a slower contraction. Ms Selena Ling, chief economist and head of global markets research and strategy at OCBC Bank, said the June PMI readings suggest that market sentiments and business confidence levels have stabilised somewhat since the April announcement of US reciprocal tariffs. However, she added: 'That said, the front-loading efforts ahead of anticipated tariffs may be largely spent.' Most analysts believe uncertainty about US trade policy and tariff deals will persist after a 90-day reprieve on higher levies ends on July 9. There are also signs that business momentum may cool in the coming months once the tariff realities kick in. Ms Ling noted that despite the June PMI recovery, the future business indexes for both the manufacturing and electronics sectors have already posted three straight months of contraction since April. 'The employment gauges for both the manufacturing and electronics sectors remained in contraction territory at 49.8 and 49.7, respectively, suggesting persistent caution about hiring intentions, which is not unexpected given the tariff uncertainties that still surround the global economic landscape.' The latest PMI data from across Asia showed a slowdown in manufacturing activity deepening further in June. Taiwan's PMI slipped to 47.2 points in June from 48.6 in May, with new business and export sales declining at a faster pace. South Korea, which saw its PMI reading climb to 48.7 in June from May's 47.7, was still well below the 50 threshold. That was the same for China, where PMI rose to 49.7 in June from 49.5 in May, according to a report by the National Bureau of Statistics.

Straits Times
02-06-2025
- Business
- Straits Times
Singapore factory activity stays in contraction for second month on global trade uncertainty
The purchasing managers' index edged up 0.1 point from April to post a slower contraction reading at 49.7 points. PHOTO: ST FILE Singapore factory activity stays in contraction for second month on global trade uncertainty SINGAPORE – Manufacturing activity in Singapore shrank again in May, although at a slower pace than the month before, as US President Donald Trump's tariffs continued to threaten the global economic outlook, despite a de-escalation in the US-China trade war. The purchasing managers' index (PMI), a barometer of the manufacturing sector's health, edged up 0.1 point from April to post a slower contraction reading at 49.7 points. Readings above 50 indicate growth, while those below point to contraction. This is the second contraction reading for the overall manufacturing sector, after having recorded 19 months of expansion, said the Singapore Institute of Purchasing and Materials Management (SIPMM), which issued the report on June 2. Before falling into contraction in April, the last time the manufacturing PMI reading was below 50 was in August 2023 when it stood at 49.9 points, SIPMM data showed. Mr Stephen Poh, SIPMM's executive director, said the slower contraction reading in May could be a result of thawing US-China trade tensions, with the world's two largest economies slashing their tariffs substantially. 'However, global uncertainty remains despite the temporary suspension of tariffs,' he said. Under an agreement reached on May 12, the US slashed tariffs on China from 145 per cent to 30 per cent, while Beijing's retaliatory levies on US goods were lowered to 10 per cent from 125 per cent. The tariff reprieve is meant to last 90 days, during which time negotiators hope to secure a longer-term agreement. However, on May 30, President Trump accused China of violating terms of the truce on tariffs, a claim China has responded to with its own accusations of US wrongdoing. Said Mr Poh: 'Amid the geopolitical fragmentation, supply chain disruptions are becoming more frequent and less predictable.' Still, the latest PMI reading reflects slower contractions in key sub-indexes such as new orders, factory output and employment and faster expansions of input purchases and imports. Input prices, finished goods and order backlog also contracted at a slower pace, while the future business index shrank at a faster pace compared with April. The PMI for the electronics sector – which accounts for about 40 per cent of Singapore's manufacturing output – edged up 0.1 point in May from the previous month to post a slower contraction at 49.9 points. Before the 1.1-point drop in April, the sector had expanded for 17 straight months. This latest reading for the sector was helped by faster expansion in new orders, input purchases and imports. Also, the new exports index reverted to an expansion and factory output shrank at a slower pace. However, employment in electronics contracted in May at a faster pace, and indexes of finished goods, supplier deliveries, factory output and order backlog recorded slower expansion readings. DBS Bank senior economist Chua Han Teng said US tariff uncertainties and global trade frictions, despite the temporary suspension of US reciprocal tariffs, are negative for Singapore's external demand prospects, and will likely weigh on new export orders and factory production, particularly in the second half of 2025. 'Singapore's export-oriented factories remain vulnerable to the US tariff roller coaster,' he said. The Republic's latest PMI reading comes on the back of shrinking factory activity in May across much of Asia. Soft domestic demand in China and the impact of US tariffs took a heavy toll on manufacturing companies, private surveys showed on June 2. Trade-reliant Japan and South Korea continued to see manufacturing activity contract in May as President Trump's car tariffs clouded the outlook for exports. Adding to the gloom, an official survey on May 31 showed China's manufacturing activity shrank in May for a second month in a sign of weakness in the world's second-largest economy. Ms Xiaoqing Pi , Greater China economist at Merrill Lynch, said: 'While the US-China trade truce boosted sentiment, the recovery in growth momentum is far from solid, with domestic demand remaining weak.' Vietnam, Indonesia and Taiwan also saw factory activity shrink in May, private surveys showed. Join ST's Telegram channel and get the latest breaking news delivered to you.
Business Times
02-06-2025
- Business
- Business Times
Singapore PMI marks slower contraction in May as trade tensions thaw but uncertainty remains
[SINGAPORE] Singapore's overall factory activity improved in May, but remained in contraction. This was as global powers' trade tensions de-escalated, but the outlook remains uncertain. The city-state's Purchasing Managers' Index (PMI) posted a reading of 49.7 last month, up 0.1 point from April, data from the Singapore Institute of Purchasing and Materials Management (SIPMM) showed on Monday (Jun 2). This marked two months of contraction, after a 19-month expansion streak. A reading above 50 indicates expansion. Stephen Poh, executive director at SIPMM, noted that the slower contraction could be due to 'thawing trade tensions when the world's two largest economies slashed their substantial tariffs'. On May 12, the US and China agreed to temporarily roll back the bulk of sky-high tariffs imposed on each other since 'Liberation Day'. Similar to Singapore's milder contraction, official Chinese data recorded an improvement, while University of Michigan data showed that US consumer sentiment rebounded in May, highlighted UOB associate economist Jester Koh. The improvements likely reflect some degree of optimism from the temporary US-China truce, he said. BT in your inbox Start and end each day with the latest news stories and analyses delivered straight to your inbox. Sign Up Sign Up Singapore's electronics sector PMI, which was on a 17-month streak of expansion till March, also recorded a second month of contraction. It edged up 0.1 point, to 49.9 in May. The uptick, coming after five consecutive months of deterioration, is likely due to lingering front-loading momentum, said Koh, given the potential of higher tariffs after the US' 90-day pause on reciprocal tariffs and looming sectoral tariffs. Still, Poh warned that global uncertainty remains despite the temporary tariff suspension, with more frequent and less predictable supply chain disruptions amid geopolitical fragmentation. US President Donald Trump last week accused China of violating their agreement, while a spokesperson for China's ministry of commerce accused Washington of severely undermining the truce earlier on Monday. These mutual accusations 'reflect the significant challenges in the path to achieving a lasting de-escalation of trade tensions', said DBS senior economist Chua Han Teng. Ongoing uncertainty continues to threaten global trade and growth prospects, in turn contributing to weak business sentiment, including in Singapore's manufacturing PMI data, he said. Chua flagged that the latest local data signals a 'weaker outlook', with minimal improvement following April's sharp declines. Some sub-indices reflected the weakness, he said. Headline and electronics manufacturing production sub-indices contracted for the second straight month, Meanwhile, though they did not contract in May, headline and electronics new export orders sub-indices moderated from late-2024 peaks. Koh noted that, 'more worryingly' than the overall PMI, the employment and future business sub-indices remain in contraction, possibly indicating concerns over demand prospects in the medium term, as trade negotiations are likely to take some time, with risks of re-escalation should talks go south. Region mostly in contraction Factory activity across Asia was largely similar to Singapore. Figures from China's national statistics bureau showed that manufacturing PMI – 49.5 in May – shrank for a second straight month, but contracted at a softer pace. The Caixin PMI, derived from smaller private manufacturers, is yet to be released. South Korea's S&P Global Manufacturing PMI picked up slightly from April, but remained in contraction at 47.7 in May. Its new orders saw the strongest fall since June 2020. Similarly, Taiwan's PMI, published by S&P Global, rose but stayed below the neutral level, at 48.6. Slightly closer to home, Vietnam and Indonesia's PMI rose – indicating a slower contraction rate – but remained below the neutral 50 mark for the second successive month. Vietnam's PMI was 49.8, while Indonesia's was 47.4. As for the Philippines, the latest PMI data indicated a setback to growth momentum built in April, with May recording broad stagnation in its manufacturing sector.
Business Times
02-05-2025
- Business
- Business Times
Singapore factory activity in April records steepest fall since Covid, mirroring regional pullback
[SINGAPORE] Singapore's overall factory activity fell sharply last month, retreating into contraction territory and mirroring the regional pullback, as US President Donald Trump's 'Liberation Day' tariffs began to exact a toll on manufacturers. The city-state's Purchasing Managers' Index (PMI) dropped to 49.6, shaving off one point from the previous month and ending a 19-month streak of expansion, data from the Singapore Institute of Purchasing and Materials Management (SIPMM) showed on Friday (May 2). A reading above 50 indicates expansion. The electronics sector PMI, which was on a 17-month streak of expansion, also recorded a steep fall to 49.8 in the same period, down 1.1 points from March. These readings coincide with Trump's onslaught of tariffs announced on Apr 2, even if they are on pause for most countries other than China. DBS economist Chua Han Teng said that the fall in the readings was the steepest observed since the Covid-19 pandemic in early 2020. 'A more protectionist global landscape – led by higher US tariffs on a wide range of trading partners including China – will likely further dampen external demand, negatively impacting Singapore's manufacturing prospects, especially in the second half of 2025,' he noted. BT in your inbox Start and end each day with the latest news stories and analyses delivered straight to your inbox. Sign Up Sign Up He added that Singapore's electronics and biomedical manufacturing clusters remain 'susceptible' to potential US levies on semiconductor and pharmaceutical imports that could be introduced later on. 'Singapore's deep integration into the global semiconductor supply chain makes it indirectly vulnerable to a broader US tariff-induced semiconductor downturn. US pharmaceutical import duties pose higher downside growth risks for Singapore compared to other Asean-6 peers,' he explained. Regional retreat Elsewhere, China's official PMI fell to 49 in April, from 50.5 in March, representing the fastest fall in 16 months. The Caixin PMI, derived from smaller private manufacturers, came in at 50.4, down 0.8 point from before. While this is the lowest recording since January, April marks the seventh straight month of expansion. 'The US tariff hikes took a toll on external demand, with new export orders declining at the fastest rate since July 2023, leading to just a marginal increase in total new orders in April,' said Wang Zhe, senior economist at Caixin Insight Group. Despite the early negative impact from the tariffs, however, Citi economists Yu Xiangrong, Hu Yuanliu and Ji Xinyu said in a report that 'the path for de-escalation could be relatively narrow and domestic support would likely step up ahead'. They added that the 'hard trade data' may hold up better, based on their tracking of port and shipping. In South Korea, the S&P Global Manufacturing PMI sank deeper in April at 47.5, from 49.1 the previous month. This is the most pronounced worsening of business conditions since September 2022. 'According to manufacturers, challenging domestic economic conditions and the impact of US tariffs weighed heavily on the sector, stymieing new product launches and sales in both domestic and external markets,' said Usamah Bhatti, economist at S&P Global Market Intelligence. Similarly, Taiwan's PMI, also published by S&P Global, dived to 47.8 in April, down two points from the month before and the quickest rate of decline since December 2023. Annabel Fiddes, economics associate director at S&P Global Market Intelligence, said that manufacturers reacted to the weaker demand environment 'by curbing their input buying, downwardly adjusting their stock levels and cutting their selling prices'. Countries across South-east Asia also saw their PMI receding into contraction. In particular, the S&P Global Indonesia Manufacturing PMI plunged to 46.7 in April, from 52.4 in the previous month – the most marked deterioration in business conditions since August 2021. 'In response, firms engaged in retrenchment practices by scaling back purchasing and employment levels while also winding down stocks of inputs and finished items,' said Bhatti. He added: 'The near-term outlook remains clouded, as manufacturers redirected capacity to complete outstanding business in the absence of sales, suggesting that the current malaise will extend into the coming months.' Malaysia and Thailand recorded more marginal decreases – down 0.2 point to 48.6 for the former; and 0.4 point lower to 49.5 for the latter.