The Singapore manufacturing industry, one of Southeast Asia’s largest despite the island nation’s small size, grew for the second month in a row in June after contracting for five straight months.
The city state’s Purchasing Managers Index (PMI) came out with reading of 50.4 -a 0.2 point gain from May. A number above 50 shows that manufacturing activity is increasing, while one below 50 means that it is slowing.
Export orders decreased, but an expansion in new orders, as well as an increase in production output, contributed to a higher PMI reading. Singapore’s electronics sector enjoyed the highest manufacturing growth at 50.3 – an increase of 0.5 points over the month of May.
The Singapore Institute of Purchasing & Materials Management (SIPMM) said that the resurgence in manufacturing activity is being caused by more orders, greater production output, as well as higher inventory.
Manufacturing Grows – For Now
The PMI has stayed above 50 for the past two months, but some analysts warn that this may not continue and that it’s not yet time to celebrate.
“It’s nothing to shout about. And in fact, the sustainability is still in doubt if you look at the conditions in the external environment. And then (there is) also the recent performance in some of the regional peers, especially Korea and Taiwan,” explained Irvin Seah, senior economist at DBS Bank.
The most recent PMI readings from Taiwan and South Korea both showed a slowdown in manufacturing activity.
Other analysts, such as Jeff Ng at Standard Chartered Bank, are cautiously optimistic “There has been some degree of replacement demand coming in, both from the domestic consumers and also from the stabilizing world economy at the moment.”
“So, we are not seeing any strong expansions going forward, but I think it still hints at a mildly positive outlook.”