SINGAPORE, July 2 (Xinhua) -- Singapore's purchasing managers' index (PMI), an early indicator of manufacturing activity, declined 0.2 points from 52.7 in May to 52.5 in June, Singapore Institute of Purchasing and Materials Management (SIPMM) said on Monday.

It marked the 22nd month of consecutive expansion of Singapore's manufacturing sector.

Meanwhile, the PMI of Singapore's electronics industry dropped from 52.3 to 51.9, marking the 23rd month of consecutive expansion of the electronics industry.

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

According to the SIPMM, the higher PMI reading was attributed mainly to slower growth in factory output, new orders and new exports, as well as slightly lower inventory levels.

Selena Ling, head of Treasury Research & Strategy of OCBC Bank, said Singapore's softer PMI readings were not unexpected as other global and regional manufacturing PMIs had begun signaling some signs of weakness amid the ongoing global trade war headwinds.

She said investors prefer to de-risk into the heightened global trade war uncertainties, and both business and consumers were starting to weigh the potential spillovers on growth and inflation. It is likely that this negative cycle could start to bite on Singapore's economic indicators for the third quarter of this year.

According to Ling, there could be downside risk that may challenge OCBC's baseline forecasts for Singapore's 2018 full-year GDP and manufacturing growth, which are at 3 percent and 4.4 percent year on year.

"In a scenario where our worst trade war fears materialize, and manufacturing growth flatlines or even contracts in the second half of this year with potential spillovers into sentiment-sensitive services sectors, the full-year GDP growth could come in around 2.7 percent instead of 3 percent year on year," she added.