Manufacturing and services activities expand at accelerated pace

• Festive demand and normalising economy push manufacturing heft to pre-crisis era highs 

Both manufacturing and services activities continued their strong performance through March 2025, expanding at an accelerated pace as the festive season demand added a further flywheel to the economy that is growing at a solid pace. 

According to the monthly Purchasing Managers’ Index (PMI) data for March, manufacturing activity recorded an index value of 63.9, increasing from 56.8 index points in February.

Meanwhile, the services sector PMI registered an index value of 69.8, up from 56.5 index points in February. This again reflects a faster expansion in services activity, driven by both heightened activity ahead of the traditional New Year season and increased lending as borrowing costs have fallen to very low levels.

The PMI indicates that services activities have been expanding for two years since March 2023, and manufacturing has been growing from around October 2023, with a brief dip in activity in April last year due to factory closures for the extended New Year holidays. However, the growth momentum persisted.

Notably, the March manufacturing PMI marked the highest in four years, signifying that the economy has largely returned to normalcy following the significant contraction in 2022 and 2023. The seasonal demand provided an additional impetus to manufacturing activity this time, with a considerable increase in consumer spending after approximately five years of depressed spending since 2020.

In the PMI, an index value above 50.0 indicates an expansion in activity, while a value below that signifies a contraction.

The March 2025 manufacturing PMI was supported by month-on-month expansions across all sub-indices.

This growth was primarily driven by sharp increases in new orders and production sub-indices, particularly within the food and beverage and textiles and wearing apparel manufacturing sectors.

While expectations among manufacturing sector participants remain positive for the next three months, export-oriented manufacturers have expressed some concerns regarding the uncertainties surrounding recent tariffs announced by the United States.

Sentiments were similar among services sector participants too.

Services sector activity was mainly propelled by wholesale and retail trade due to festive demand, as well as the expansion in financial services resulting from increased lending.

Lower borrowing costs are encouraging individuals and businesses to seek new and additional loans for consumption, business expansion, and working capital needs.

Additionally, other activities contributing to the services sector expansion included professional services, other personal services, accommodation, food and beverage, and insurance-related business activities.

Employment in both manufacturing and services activities saw expansion as firms hired staff to cope with the rising activities in the festive season.