Weaker external demand and electronics downcycle continue to hit PMI

There may be a sign of improvement but headwinds continue.

The manufacturing purchasing managers’ index (PMI) grew 0.2 points to 50 in February 2023, the second consecutive month that it improved after five months of contraction, UOB said.

UOB noted that the electronics segment is still shrinking for the seventh consecutive month even as there was an uptick of 0.2 points to 49.3.

“The improvement in both PMIs was due to slower contraction and some sub-indices bouncing above 50,” it also noted.

The setbacks in the PMI were weaker employment and input prices increase.

Looking ahead, the recent improvements show a promising future for the manufacturing industry but there is still weaker external demand and electronics downcycle may cause PMIs to shrink in the subsequent months.

With this, UOB retains its full-year forecast that the manufacturing segment will contract 5.4% in 2023.