Singapore Institute of Purchasing and Materials Management (SIPMM) said on Thursday that the country's purchasing managers' index (PMI), an early indicator of manufacturing activity, declined 0.2 points from 52.5 in May to 52.3 in July.

It marks the 23rd month of consecutive expansion of Singapore's manufacturing sector.

Meanwhile, the PMI of Singapore's electronics industry dropped from 51.9 to 51.6, marking the 24th month of consecutive expansion of Singapore's electronics industry.

A PMI reading of 50 and above indicates expansion, while a reading below 50 indicates contraction.

Selena Ling, head of Treasury Research & Strategy of OCBC Bank, attributed the lower print for the manufacturing PMI to slower growth in new orders, new exports, factory output and inventory levels. She said there was a similar story seen in the electronics PMI sub-gauges.

"Moreover, there is sustained contraction for both the manufacturing and electronics sectors' order backlog gauges, coupled with rising stocks of finished goods," she said. "They suggest that the PMI readings will continue to slide in the coming months."

According to Ling, Singapore's manufacturing growth will slow down significantly from around 9.2 percent year-on-year in the first half of this year to around 1.9 percent in the second half, partly due to the high base in July-October 2017 and also the external uncertainties.

Considering Singapore's GDP growth for the first six months of this year was estimated at 4.1 percent year-on-year, and the services sector was expected to take the drivers' seat in the second half, Ling said the OCBC's GDP growth forecast for the second half of 2018, which stands at around 2 percent year-on-year, was still reasonable. Thus, the bank will maintain its full-year GDP growth forecast at 3 percent.