Electronics PMI improves to 51.9 as output lags rising demand

Growth driven by gains in new orders, output, exports, and employment.

Singapore’s electronics Purchasing Managers’ Index (PMI) rose in May, with the sector continuing to show improvement even as production trails strengthening demand, according to UOB.

The electronics PMI increased by 0.2 points to 51.9, whilst the overall PMI rose 0.3 points to 51.0, marking the strongest reading since August 2018.

The data suggest sustained improvement in operating conditions, particularly in the electronics segment, the bank said.

According to the Singapore Institute of Purchasing & Materials (SIPMM), the stronger reading reflected broad-based gains in new orders, new export business, factory output, input purchases, and employment. Imports, input prices, order backlogs, and business expectations also showed improved growth during the month.

May marked the tenth consecutive month of expansion for the manufacturing sector and the highest PMI reading since December 2024.

SIPMM Executive Director Stephen Poh said the data signals a positive outlook for manufacturing, underpinned by continued demand from the AI-driven technology cycle.

He also cautioned that higher input costs and slower supplier deliveries are still weighing on margins and operational efficiency.

Underlying components showed broad-based gains, UOB noted. New orders rose to 52.5 from 52.3 in April, output increased to 51.7 from 51.5, and employment edged up to 51.4 from 51.2. Future business expectations also improved to 52.0 from 51.8, pointing to continued positive momentum ahead.

The order backlog rose to 51.9 from 51.7, whilst finished goods inventories declined to 49.9 from 50.2. This suggests that production is still lagging behind demand.

“Greater scope to enhance capacity utilisation should bode well for electronics manufacturing activity in the months ahead, with firms likely continuing to draw down inventories,” UOB said.

At the same time, supply-side pressures remain evident.

Input prices in the broader PMI rose by 0.3 points to 51.6, likely driven by higher energy- and fuel- related costs and other input costs linked to ongoing geopolitical tensions in the Middle East.

Supplier delivery times also deteriorated, with the sub-index falling to 48.7 from 49.1.