Singapore factory activity ticks up to end two-month contraction as US tariffs loom

SINGAPORE - Manufacturing activity in Singapore staged a modest rebound in June after languishing in contraction territory for two straight months, but uncertainty prevails with a reprieve on

US President Donald Trump’s global tariffs set to end next week.

Singapore’s purchasing managers’ index (PMI), a barometer of the manufacturing sector’s health, edged up from 49.7 points in May to 50 in June, with readings above that level indicating expansion.

“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,” said Mr Stephen Poh, executive director of the Singapore Institute of Purchasing and Materials Management (SIPMM).

Despite the PMI rise, Mr Poh said: “Anecdotal evidence suggests that local manufacturers are concerned about the rapidly shifting landscape of global trade policy and tariffs, resulting in supply chain fragmentation.”

SIPMM is a professional body that gathers and compiles PMI data monthly through surveys of logistics, procurement and supply chain management professionals.

In May, it said Singapore manufacturers were facing a wave of export-order deferments and cancellations from foreign buyers hit by Mr Trump’s reciprocal tariffs announced in April.

While front-loading of orders by traders trying to get ahead of the tariffs propped up manufacturing and exports for a while in 2025, the exports and output data for May showed that support had started to wither.

Factory output in May rose 3.9 per cent year on year, but this was a slowdown from April’s 5.6 per cent gain and March’s 6.9 per cent growth. In May, also, non-oil domestic exports slid 3.5 per cent year on year, reversing a 12.4 per cent rise in April.

SIPMM said the latest PMI reading was attributed to an expansion in new orders, a faster expansion rate in new exports and input purchases, and a slower contraction rate of factory output and employment.

It said the imports index posted a faster expansion rate, whereas a slower expansion rate was recorded for supplier deliveries, finished goods and order backlog.

The input prices index reverted to an expansion, while the future business index posted a faster contraction.

The electronics sector PMI also increased in June after contracting for two months. It rose by 0.2 point from the previous month to 50.1 points.

SIPMM said the latest reading for the electronics sector PMI was supported by a faster expansion rate in sub-indexes of new orders, new exports and input purchases.

Factory output resumed expansion, and employment in the sector posted a slower contraction.

Ms Selena Ling, chief economist and head of global markets research and strategy at OCBC Bank, said the June PMI readings suggest that market sentiments and business confidence levels have stabilised somewhat since the April announcement of US reciprocal tariffs.

However, she added: “That said, the front-loading efforts ahead of anticipated tariffs may be largely spent.”

Most analysts believe uncertainty about US trade policy and tariff deals will persist after a 90-day reprieve on higher levies ends on July 9. There are also signs that business momentum may cool in the coming months once the tariff realities kick in.

Ms Ling noted that despite the June PMI recovery, the future business indexes for both the manufacturing and electronics sectors have already posted three straight months of contraction since April.

“The employment gauges for both the manufacturing and electronics sectors remained in contraction territory at 49.8 and 49.7, respectively, suggesting persistent caution about hiring intentions, which is not unexpected given the tariff uncertainties that still surround the global economic landscape.”

The latest PMI data from across Asia showed a slowdown in manufacturing activity deepening further in June.

Taiwan’s PMI slipped to 47.2 points in June from 48.6 in May, with new business and export sales declining at a faster pace.

South Korea, which saw its PMI reading climb to 48.7 in June from May’s 47.7, was still well below the 50 threshold.

That was the same for China, where PMI rose to 49.7 in June from 49.5 in May, according to a report by the National Bureau of Statistics.