Singapore’s PMI rebounds to expansion territory in June amid improving regional activity 

[SINGAPORE] Singapore’s overall factory activity returned to expansion territory in June after two straight months of contraction, data from the Singapore Institute of Purchasing and Materials Management (SIPMM) showed on Wednesday (Jul 2).

The purchasing managers’ index (PMI) expanded marginally last month, by 0.3 point to 50. A reading of 50 and above on the index indicates growth from the previous month, while one below 50 points to a contraction.

Similarly, the linchpin electronics sector edged up 0.2 point from the previous month to record an expansion at 50.1 in June, after two straight months of contraction.

SIPMM executive director Stephen Poh said: “It is heartening to note that the manufacturing sector has reverted to an expansion going into the second half of the year, albeit trade uncertainties remain in the global economic environment.”

However, he also acknowledged that local manufacturers are concerned about “the rapidly shifting landscape of global trade policy and tariffs, resulting in supply chain fragmentation”.

Selena Ling, chief economist at OCBC, said the improvements in Singapore’s manufacturing and electronics PMIs suggest that “market sentiments and business confidence levels have stabilised somewhat” since the April announcement of US reciprocal tariffs and the ensuing market volatility.

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“The June PMI readings illustrate a semblance of a return to some normalcy, likely underpinned by hopes” the US will strike more trade deals or truces, as it did with the UK and China, she added.

However, she also pointed out that front-loading efforts “may largely be spent” as the end of the 90-day pause on US reciprocal tariffs approaches.

“There are some tentative signs that business momentum may cool in the coming months once the tariff realities kick in, and the 10 per cent universal tariffs look likely to stay intact.”

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UOB associate economist Jester Koh likewise said the June readings likely reflect “better sentiment, driven by hopes of a durable trade and tariff de-escalation following the two-day US-China negotiations in London”, as well as near-term front-loading momentum.

But he warned that the payback from earlier front-loading could lead to a “more protracted downturn” in manufacturing and trade activity in H2 2025, cushioned partly by less cyclical demand for data storage and spillover effects into consumer electronics.

Though most remained in contraction, some regional economies picked up in June.

China’s official manufacturing PMI contracted for a third straight month, albeit at a slower pace, posting a reading of 49.7 in June compared to 49.5 in May. Surprisingly, the Caixin PMI, derived from smaller private manufacturers, rose to 50.4 from 48.3.

Both South Korea and Malaysia remained in contraction territory despite improvements. South Korea’s S&P Global manufacturing PMI rose to 48.7 in June from 47.7 in May, while that of Malaysia was 49.3 in June, up from 48.8 the month before.

Taiwan’s S&P Global manufacturing PMI, meanwhile, registered its steepest decline in one-and-a-half years – it slid to 47.2 in June, from 48.6 in May.

Vietnam’s S&P Global manufacturing PMI also fell in June, to 48.9 from 49.8 the previous month.