Singapore factory activity expands in September, ‘supercharged’ by AI demand

Singapore's factory activity surged in September for the 14th consecutive month, propelled by robust artificial intelligence (AI) demand, according to the purchasing managers' index (PMI). The PMI rose to 51.7 points in September, up from 51.5 points in August, marking its highest reading since October 2018. The electronics sector, which makes up 40% of Singapore's manufacturing output, posted a PMI of 52.9 points, its 16th straight month of expansion.

Stephen Poh, executive director at the Singapore Institute of Purchasing and Materials Management, cited stronger orders, production, and employment in the industry as key drivers. However, rising input costs and longer supplier lead times are intensifying operational pressures on manufacturers. Meanwhile, China's PMI returned to expansion in September after two months of contraction, while the US economy grew at a 2.2% annualized rate in the second quarter, driven by robust consumer spending and AI-related business investment.

Despite these positive trends, the supplier deliveries index contracted at a faster pace for the ninth consecutive month due to growing order backlogs and shrinking finished goods inventories.