SINGAPORE's Purchasing Managers' Index (PMI) reverted to contraction mode in July, slipping 0.7 point to 49.7 after rising for two straight months.
The drop was more than the market had forecast. Private-sector economists polled by Bloomberg had earlier projected a reading of 50.1, down from June's 50.4.
A reading above 50 denotes growth, while one under 50 points to a contraction in the manufacturing sector.
Said the Singapore Institute of Purchasing & Materials Management (SIPMM), which compiles the index monthly from a survey of more than 150 manufacturing firms' purchasing managers: "The contraction in the overall PMI was attributed to first-time contraction in new orders and production output as well as further decline in new export orders.
"Inventory, stockholdings of finished goods and imports expanded further whilst employment continued to contract and recorded lower readings."
The electronics PMI also fell below the 50-point mark in July, dropping 0.8 point to 49.5.
The readings indicate a decline in new orders from both domestic and overseas markets. "Production output contracted for the first time after having expanded over two consecutive months," added SIPMM.