Singapore factory activity hit by sharpest fall in more than 5 years amid COVID-19 outbreak
SINGAPORE: Singapore’s factory activity contracted sharply in February, amid an ongoing COVID-19 outbreak that has disrupted global supply chains and affected production in the region.
The Singapore Purchasing Managers’ Index (PMI) fell 1.6 points from the previous month to 48.7 in February, the biggest monthly decline since August 2014, according to a survey by the Singapore Institute of Purchasing and Materials Management (SIPMM) published on Tuesday (Mar 3).
February’s reading, which falls below the 50-point level that separates growth from contraction, is also the lowest recorded since February 2016’s reading of 48.5, and reverses two months of expansion for the overall manufacturing sector.
“The latest PMI reading was attributed to first-time contractions for the key indicators of new orders, new exports, factory output, inventory and employment,” said SIPMM.
The indexes of imports, input prices, supplier deliveries, and order backlog recorded first-time contractions, while the finished goods index posted a slower rate of expansion, it added.
The key electronics cluster contracted by 2.5 points in February, the biggest monthly decline since October 2012. This took PMI for the sector in February to 47.6, reversing an expansion in the previous month and making it the lowest reading since December 2012.
MANUFACTURERS “INCREASINGLY CONCERNED”
Factory activity across Asia plunged in February amid a global coronavirus outbreak that has so far killed more than 3,000 people around the world.
China’s factory activity suffered its sharpest contraction on record in February, the Caixin/Markit Manufacturing Purchasing Managers' Index showed on Monday, following the Chinese government's PMI release on the weekend which also showed a record pace of decline.
Japan’s PMI showed its factory activity was hit by the sharpest contraction in nearly four years in February, while South Korea's factory activity also shrank faster as export orders contracted at the quickest pace in more than six years.
“The COVID-19 outbreak that accelerated at the end of January has disrupted global supply chains and impacted the manufacturing sectors,” said Ms Sophia Poh, vice president of industry engagement and development at SIPMM.
“Manufacturers are increasingly concerned about the extent of this disruption, especially when the rate of infections (is) increasing worldwide,” she added.
Last month, Singapore downgraded its GDP forecast for the year amid concerns about the ongoing outbreak. Prime Minister Lee Hsien Loong has also warned that the outbreak will have a significant impact on the local economy for the next couple of quarters.
During his Budget Speech, Finance Minister Heng Swee Keat announced an S$800 million sum to help frontline agencies fighting the disease, as well as a S$4 billion package to help workers and companies weather near-term economic uncertainties.
More than 100 people have contracted the disease in Singapore, with the outbreak prompting the Government to raise the country’s Disease Outbreak Response System Condition (DORSCON) to Orange on Feb 7.