Singapore factory activity expands in August, even as supply chain crisis from Iran war deepens
The purchasing managers’ index rose for the 13th consecutive month in August.
Singapore's factory activity surged in August for the 13th consecutive month, peaking in nearly eight years, despite ongoing US-Iran peace talks and the Strait of Hormuz blockade. The Republic's purchasing managers' index (PMI) soared to 51.5 in August, its highest since November 2018. The electronics sector, comprising 40% of Singapore's manufacturing output, showed a PMI of 52.6, marking its 15th consecutive month of growth.
Stephen Poh, executive director at the Singapore Institute of Purchasing and Materials Management, attributed the sector's robust performance to the AI-driven semiconductor super-cycle, driving record order backlogs and strong employment. Private surveys in China, Japan, and South Korea also revealed a solid demand for AI-related products, offsetting Middle Eastern supply chain disruptions that have led to longer delivery times and soaring input costs.
UOB associate economist Jester Koh noted that lead times have lengthened due to cargo taking a longer route around the Cape of Good Hope to avoid the Strait of Hormuz. Despite these challenges, the future business index expanded for the 10th consecutive month, reflecting manufacturers' continued confidence in operating conditions.
The electronics sector is expected to remain the primary driver of overall manufacturing activity due to strong external demand, particularly from major US hyperscalers, despite ongoing supply constraints.
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