Helium risks shadow Singapore’s nine-month manufacturing surge
AI investment is anchoring the semiconductor equipment sector even as Middle East instability shadows the broader manufacturing outlook.
Singapore's manufacturing sector is showing signs of durable recovery, with activity expanding for the ninth straight month in April 2026 — driven largely by an AI-fuelled electronics boom that analysts say now faces a critical supply threat.
Singapore's Purchasing Managers’ Index reached 50.7 in April, up 0.2 points from March, marking the ninth consecutive month of expansion and the highest reading since February last year, driven by stronger new orders, new exports, factory output, input purchases, and employment.
Singapore Institute of Purchasing and Materials Management executive director Stephen Poh said the latest readings reflect support from the global artificial intelligence cycle, particularly in the electronics and semiconductor segments, as well as contributions from precision and transport engineering sectors.
The electronics sector sub-index rose to 51.2, with VT Markets noting this aligns with March non-oil domestic exports data showing a year-on-year increase of 3.1%, beating consensus forecasts.
"The consistent positive data points towards a solidifying recovery in global tech demand," it said.
Barnabas Gan, group chief economist and head of market research at RHB Bank, echoed the upbeat tone, noting that business sentiments for April to September 2026 remain positive despite geopolitical uncertainty.
"This upbeat sentiment is led by firms supporting the global semiconductor industry, particularly those in the semiconductor equipment industry, amidst strong AI-related investment globally," he said.
However, Gan flagged a key risk: potential disruptions to helium supplies from the Gulf region, which could constrain semiconductor and high-value manufacturing output, raising costs and limiting capacity in the coming months.
The broader manufacturing momentum has prompted RHB to upgrade its forecast for Singapore's first-quarter GDP growth to 5.3% from MTI's advance estimate of 4.6%.
"This adjustment follows a stronger-than-expected IP growth of 7.9% year-on-year versus 5.0% in the advance estimates," the bank said.
VT Markets added that the data has clear implications for markets.
"For equity derivative traders, this reinforces a bullish bias on the Straits Times Index," it said, noting the strong economic picture also gives MAS more reason to maintain its gradual SGD appreciation policy, reducing the likelihood of any near-term policy easing.
"This trend is a welcome change from the more volatile readings we saw in late 2025 when the PMI hovered much closer to the 50-point mark. The sustained growth in early 2026 suggests the manufacturing downturn from that period is now firmly behind us," VT Markets added.
