SINGAPORE: Singapore's manufacturing economy took a dip in May, contracting for the third straight month.

The Purchasing Managers' Index (PMI) came in at 49.0 in May, down 0.3 point from April. This was the third straight month the PMI came in below 50, indicating that the manufacturing sector is generally contracting.

The decline was attributed to lower new orders and new export orders, as well as further contractions in production output and employment.

The manufacturing sector has been slowing down in recent months.

An analyst said the sector is in for a bumpy ride in the second and third quarters of this year, largely because of the global slowdown and weaker demand from the US.

OCBC Bank's treasury economist, Selena Ling, said: "Obviously, the global economy has turned south and demand outlook is increasingly less sanguine going forward.

"So we actually may not see second quarter and third quarter growth - especially for the manufacturing side - being as healthy as what we saw in the first quarter this year."

She added that Singapore manufacturers are turning more cautious as the outlook for the US remains uncertain. She also noted that there are risk factors to be considered going forward.

"I think increased cost is one. Then on top of that, if global demand is actually slowing down, they (manufacturers) actually may be faced with a double whammy because the (Singapore) dollar is very strong, implying that exporters will actually feel some pricing pressures."

The corresponding index for the electronics sector came in at 49.4, showing a contraction after 21 straight months of expansion. The dip of 0.8 point from the previous month was due to lower production output, inventory, stocks of finished goods as well as a contraction in employment.

The monthly PMI figures are closely watched because the manufacturing sector accounts for 25 per cent of Singapore's economy. - CNA/ac