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Singapore’s manufacturing activity falls to lowest level in over 3 years

The PMI came in at 48.5, down from 49.0 in January. This is the eighth month of contraction and the lowest level since December 2012.

SINGAPORE: Manufacturing activity in Singapore fell to its lowest level in over three years, as factories in the Republic saw fewer new orders, while output and employment declined.

A report by the Singapore Institute of Purchasing and Materials Management (SIPMM) on Wednesday (Mar 2) showed that the Purchasing Managers' Index (PMI) for February came in at 48.5, down from 49.0 in January. A reading above 50 means that the manufacturing economy is generally expanding, while a reading below that indicates a contraction.

Singapore's PMI has hovered below the 50-point level since July. This is the eighth month of contraction and the lowest level seen since December 2012.

The PMI for the electronics sector also showed a contraction, with the index coming in at 48.2 in February - a drop of 0.3 point from January.

With China's PMI also contracting, one economist said this may hurt the demand for Singapore's exports in the coming months.

Said Mr Francis Tan, an economist at UOB: "China plus Hong Kong together is our largest exporting partner. The share is around 11-12 per cent of our total exports. If China slows down even further in the few months ahead, I foresee that Singapore’s manufacturing sector may not see a pick up as yet."

UOB said it is expects manufacturing to remain weak in the coming months, although a recovery may take place in the second half of the year. Mr Tan added that indicators from the US, such as wage growth and its labour market, point towards a possible pick-up of consumption.