May factory activity rides AI wave to tenth month of growth

PMI reading rose to its highest level since December 2024. 

The Purchasing Managers’ Index (PMI) for manufacturing rose to 51 in May, up 0.3 points from April, on the back of strong demand for artificial intelligence (AI)-driven technology. 

The increase was attributed to stronger growth in new orders, new exports, factory output, input purchases, and employment, according to the Singapore Institute of Purchasing & Materials Management (SIPMM).

Imports, input prices, order backlog, and future business also recorded stronger growth during the month.

The May reading marked the sector’s tenth consecutive month of expansion and its highest PMI level since December 2024.

SIPMM executive director Stephen Poh said the latest figures point to a positive outlook for the manufacturing sector, supported by demand from the AI-driven technology cycle.

However, he said higher input costs and slower supplier deliveries continue to pose challenges to margins and operational efficiency.

“The build-up of order backlogs and improving business sentiment suggest that manufacturers remain cautiously optimistic about near-term growth prospects,” Poh added.

The finished goods index expanded at a slower pace, whilst the supplier deliveries index contracted at a faster pace for the fifth consecutive month. The contraction reflected longer lead times and continued supply chain constraints.