Singapore’s manufacturing prospects improved further as the latest Purchasing Manager’s Index (PMI) edged up 0.1pt to 50.2 in Oct (Sep: 50.1), the second consecutive expansionary (above 50) reading. Similarly, the electronics PMI rose 0.1pt to 49.9 in Oct (Sep: 49.8), which marks the fourth consecutive month of improvement, although still mildly contractionary (below 50). 

The improvement in Oct’s overall PMI was broad-based, new exports (50.2 from 50.0) saw the strongest increase, while other key subindices saw a milder 0.1pt uptick, in particular, production (50.3 from 50.2), employment (50.2 from 50.1) and order backlog (50.5 from 50.4) which is positive for the outlook. 

Singapore Manufacturing Outlook – While we are heartened by the broadbased improvement in Oct’s overall PMI, we caution that the manufacturing sector could remain downbeat in the near term given the weak external demand, likely for the rest of 2023 and into early 2024. Headwinds in the manufacturing sector could persist on tight financial conditions stemming from an elevated interest rate environment.