Singapore: Manufacturing sector remains solid – UOB

Economist at UOB Group Barnabas Gan assesses the latest data from the manufacturing sector in Singapore.

Key Quotes

“Singapore’s manufacturing Purchasing Managers’ Index (PMI) reported by SIPMM fell marginally by 0.2 point to 50.7 in May 2021. Despite the dip, the PMI continued to post above-50 levels for the 11th straight month, suggesting that the manufacturing sector remains in expansionary territory.”

“We identify three key observations in April’s PMI reading. First, the continued expansion in Singapore’s overall and electronics PMI is supportive of its overall economic growth.”

“Second, the announcement of Phase Two (Heightened Alert [HA]) is likely the key driver behind the growth slowdown in May 2021.”

“Third and lastly, faster rates of expansion in input prices may be a sign of higher inflationary pressures in the immediate horizon.”

“Barring an exacerbation of COVID-19 infections in Singapore, the manufacturing sector is expected to be one of the key pillars of growth for Singapore. Singapore’s export-oriented industries are expected to ride on the winds of the global trade growth, which should subsequently benefit externally-facing sectors such as manufacturing, wholesale & retail trade, and financial services. As such, we expect Singapore’s manufacturing sector to expand by 5.5% in 2021.”