Singapore's factory activity grew for a 15th consecutive month in October, but at a slightly slower pace: the purchasing managers' index compiled by the Singapore Institute of Purchasing and Materials Management (SIPMM) eased 0.3 point to 51.4, according to data released on Monday evening, Nov. 2. Any reading above 50 signals expansion.

The details matter more than the headline for investors in Asian technology supply chains. The electronics PMI slipped to 52.5 from 52.9, yet the gauge of new export orders for electronics climbed to 53.2, its highest since May 2018, The Business Times reported, citing DBS senior economist Chua Han Teng. That points to demand for AI hardware that is still building, even as the overall pace of factory growth cools.

Singapore PMI: orders slow, export orders pick up

The October moderation came from slower growth in new orders, output, input inventories and employment, according to the SIPMM report as described by The Business Times. Imports and order backlogs also grew more slowly. Two components moved the other way: new exports and input prices both rose a little faster than in September.

Supply conditions improved. The supplier deliveries index contracted at a much slower pace, a sign of fewer delays, and stocks of finished goods fell less sharply than a month earlier.

Stephen Poh, executive director of SIPMM, described the sector as cooling "from a high base, not losing momentum." He said exports, AI-related orders and high backlogs continue to support electronics, but noted that output still trails orders and that input costs remain a worry. Poh also warned that fresh disruption to Middle East shipping could limit production.

Chua at DBS expects manufacturing to stay resilient in the near term, pointing to elevated order backlogs alongside the jump in electronics export orders. OCBC chief economist Selena Ling also expects factories to keep expanding, but cautioned against reading this year's strength into 2027, when she expects growth rates to normalize. She flagged investor doubts over whether companies spending heavily on AI can earn enough to justify it.

The PMI arrives a week after official data showed factory output growth slowing to 3.4% in September, dragged down by a slump in pharmaceuticals while semiconductor-related production held up.

Manufacturers' outlook doubles in EDB survey

A separate survey published the same day by the Economic Development Board (EDB) showed manufacturers turning more upbeat. A net weighted balance of 24% of firms expect business conditions to improve in October 2026 through March 2027 compared with the third quarter, the EDB said, with a weighted 29% projecting better conditions and 5% weaker. In the previous survey, released July 31, the net balance was 12%.

Output expectations rose as well. A net weighted 34% of manufacturers expect fourth-quarter production to rise from the third quarter, up from 26% in the prior survey, according to the Singapore Department of Statistics.

By cluster, precision engineering was the most optimistic at a net 48%, led by makers of semiconductor equipment that expect AI-related investment to keep growing, The Business Times reported. Electronics followed at a net 42%. Chemicals was the only negative cluster at minus 13%, with petroleum firms at minus 28% on concerns over crude oil feedstock supply. Transport engineering was roughly flat, citing higher costs for materials, fuel and freight.

A weighted 23% of firms expect difficulty winning export orders in the fourth quarter, with price competition from overseas rivals and conditions abroad, including tariffs and geopolitics, cited most often. Services firms were less upbeat than factories: a net 15% expect better conditions, up from 13%, according to the statistics department.

Asia's factories diverge

Singapore's reading sat in the middle of a mixed regional picture. South Korea's PMI fell to 51.3 from 53.9 and Taiwan's eased to 54.9 from a more than five-year high of 56.7, The Business Times reported. China's official manufacturing PMI dropped to 49.3 from 50.1, back in contraction.

Southeast Asia was firmer. Indonesia's PMI rose to 54 from 52.4, its highest since March 2024, Thailand's climbed to 54.8 and Malaysia returned to expansion at 51 from 49.9.

The next read on whether the electronics orders turn into output comes from SIPMM's November PMI, scheduled for release on Dec. 2 at 9 p.m. Singapore time.