The key electronics sector inches up by 0.1 point to 51.4 in its 10th straight month of expansion
[SINGAPORE] The Republic’s overall factory activity grew more slowly in March, with early signs of disruption from the Middle East conflict beginning to emerge.
The purchasing managers’ index (PMI) edged down to 50.5, down 0.1 point from the month before, according to data from the Singapore Institute of Purchasing and Materials Management on Thursday (Apr 2).
Still, this marked the eighth straight month of growth for the manufacturing sector. A reading above 50 indicates expansion.
UOB associate economist Jester Koh said the impact on Singapore’s PMI from the Middle East conflict has been “limited” thus far, noting that sub‑indices such as new orders, new export orders and output stayed in expansionary territory.
Though DBS senior economist Chua Han Teng noted that the continued expansion in Singapore’s PMI points to a “still-positive” outlook, he said the slight moderation in the headline indicator requires “close monitoring”.
This is in view of downside risks amid an uncertain external environment due to disruptions related to the Middle East conflict and lingering uncertainty over US tariffs.
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The linchpin electronics sector expanded at a stronger pace in March, inching up 0.1 point to 51.4. This marked the sector’s 10th straight month of growth.
This performance was supported by faster expansion in new orders, new exports, factory output, input purchases, and employment, with the employment index recording its seventh consecutive month of expansion.
The supplier deliveries index contracted at a faster rate and for the fifth consecutive month, indicating longer delivery lead times.
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Chua said the electronics sector’s latest PMI figures reflect “initial signs of mounting energy and raw material input cost pressures”, as Singapore’s manufacturers face intensified supply chain challenges due to the Middle East conflict. This has also been observed across other regional manufacturers, he added.
Similarly, UOB’s Koh said that the increase in input prices and fall in supplier deliveries “are early indications of disruption from the conflict”.
As he sees it, the former likely reflects the early effects of the surge in energy prices and prices of other petrochemical feedstocks, while the latter is a sign of likely production snags in the coming months.
While Koh expects Singapore’s manufacturing sector to continue being supported by global artificial-intelligence (AI) tailwinds, he flagged that helium supply shortages arising from the production halt at Qatar’s Ras Laffan facilities – which produce roughly 30 per cent of global helium supply – could weigh on semiconductor production.
Most regional economies registered improvements in March factory activity and remained in expansion mode, although some saw slower growth due to higher costs and material shortages stemming from the Middle East conflict.
For instance, Taiwan’s S&P Global manufacturing PMI eased to 53.3 in March, from 55.2 in February, while Vietnam’s S&P Global manufacturing PMI slowed to 51.2 from 54.3.
China’s official manufacturing PMI hit a 12-month high, re-entering expansionary territory with a reading of 50.4 in March, compared with 49 in February. Meanwhile, the RatingDog China general manufacturing PMI fell to 50.8, from 52.1.
Among those that bucked the trend were South Korea and Malaysia. South Korea’s S&P Global manufacturing PMI rose to 52.6 in March, from 51.1 in February. Meanwhile, Malaysia’s S&P Global manufacturing PMI returned to expansion at 50.7, from 49.3.
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