Singapore factory activity rises in November as demand for AI chips and servers picks up
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The purchasing managers' index rose by 0.2 point in November, with the electronics sector seeing a sixth straight month of expansion.
ST PHOTO: LIM YAOHUI
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SINGAPORE - Singapore’s manufacturing output picked up in November, putting the economy on a more solid footing for the final quarter of the year after a slowdown in October.
The purchasing managers’ index (PMI) – a barometer of the overall manufacturing industry’s health – rose to 50.2 points in November after slipping 0.1 point to 50 in October.
The electronics sector, which accounts for 40 per cent of manufacturing output, recorded a PMI of 50.6 points in November, a 0.2-point increase from October, marking its sixth straight month of expansion.
A PMI reading above 50 indicates growth; one below suggests a contraction in output.
The manufacturing industry remains in positive territory as it heads into the end of 2025, said Mr Stephen Poh, executive director at the Singapore Institute of Purchasing and Materials Management (SIPMM), which gathers and compiles the monthly survey.
The industry’s expansion comes on the back of sustained global demand for AI chips and server hardware, said Mr Poh, while data centre infrastructure needs and the seasonal rise in consumer electronics purchases are also driving increased demand in the electronics sector.
The manufacturing industry saw faster expansion rates in the indexes of new orders, imports and input prices. It saw a slower expansion rate in the indexes of finished goods, while the future business index rebounded into expansion after seven consecutive months of contractions.
Analysts say that the pick-up in November’s PMI points to a solid fourth quarter of 2025 for Singapore’s manufacturing output and non-oil domestic exports (NODX).
The Republic saw a surge in factory output in October by more than 29 per cent
The electronics sector saw faster expansion rates for the indexes of imports, input prices, order backlog, employment and future business.
Maybank economist Brian Lee said the rise in the PMI is an indication of firms’ confidence in their demand outlook as they ramp up input purchases. “We expect the growth momentum in manufacturing and exports to carry forward into the first half of 2026, given surging electronics demand from the AI boom.”
UOB economist Jester Koh added that AI-related demand could remain resilient “well into the medium term”, and tailwinds from future inventory restocking could offer the electronics sector a further boost.
While the manufacturing industry saw expansions overall, a contraction in the order backlog index – the first since May 2023 – could be a cause for concern, said DBS senior economist Chua Han Teng.
“The contracting order backlog warrants monitoring, as a sustained decline could signal fewer unfulfilled orders and a potential for factory production cutbacks, with the lagged impact of tariffs beginning to bite.”
Ms Selena Ling, chief economist and head of global markets research and strategy at OCBC, said the contraction in the order backlog index “could be something to watch, as the first quarter of 2026 is also traditionally a slower period due to the Chinese New Year holidays”.
She added that even though the future business index rebounded after seven consecutive months of contractions, it may not translate to an increase in hiring among firms as the employment gauge remained in contraction for the eighth straight month.
“This suggested employers are still cautious about expanding headcount.”
