Singapore’s factory activity expanded for the second consecutive month, after five months of contraction amid the COVID-19 pandemic.

The Purchasing Managers’ Index (PMI) for August came in at 50.1, down 0.1 point from the previous month, according to data released by the Singapore Institute of Purchasing and Materials Management (SIPMM) on Thursday (Sep 3).

A PMI reading above 50 indicates that the manufacturing economy is generally expanding, while a reading below 50 indicates that it is generally declining.

Singapore implemented a “circuit breaker” from Apr 7 to Jun 1 to curb the spread of COVID-19. The country entered Phase 1 of its reopening on Jun 2, followed by Phase 2 on Jun 19.

The latest PMI reading was attributed to an improvement in new orders index and a faster rate of expansion in factory output, and slower expansion rates in the indexes of both new exports and inventory.

“The indexes of finished goods, imports, and input prices, have reverted to expansion readings, and the order backlog index continued to expand for the second month,” said SIPMM.

However, the employment index posted contraction at a faster rate, while the supplier deliveries index posted contraction at a slower rate.

The overall employment index for the manufacturing sector has now recorded seven consecutive months of contraction.

The electronics sector PMI rose 1.4 points from the previous month to post an expansion at 50.6, following six consecutive months of contraction.

August’s reading is also the highest recorded since September 2018, when the reading was 51.4.

“The latest expansion reading was attributed to first-time expansion readings for new orders, new exports and factory output,” said SIPMM.

The electronics inventory index continued to grow for the fourth consecutive month, with a faster rate recorded in August. The electronics employment index posted a slower contraction.

“The indexes of input prices and order backlog recorded faster rates of expansion, and the imports index reverted to an expansion reading,” said the institute.

Ms Sophia Poh, SIPMM’s vice president of industry engagement and development, said August’s PMI readings point to a “silver lining” in the electronics sector, which appeared to provide a “needed boost” for the overall manufacturing sector for it to remain in expansion.

“Anecdotal evidence suggests that the pro-business measures initiated by the Singapore Government have been effective,” she added.