SINGAPORE: Singapore’s factory activity expanded for the 11th consecutive month in May, albeit at a slower rate of growth due to the impact of tighter COVID-19 measures on the sector.
The Purchasing Managers' Index (PMI) edged down 0.2 point from the previous month to post a slower rate of expansion at 50.7, according to data released by the Singapore Institute of Purchasing & Materials Management (SIPMM) on Wednesday (Jun 2).
A PMI reading above 50 indicates that the manufacturing economy is generally expanding, while a figure below that threshold points to contraction.
May’s reading was attributed to slower expansion rates in the indexes of new orders, new exports, factory outputs and employment, said SIPMM.
The supplier deliveries index returned to a marginal expansion, while the indexes of inventory, input prices and order backlog posted a faster expansion rate.
The overall employment index has now recorded three months of continuous expansion, SIPMM said, adding that the order backlog has now recorded 11 consecutive months of expansion.
Ms Sophia Poh, vice president of industry engagement and development at SIPMM, said that the heightened COVID-19 measures introduced in May has affected the manufacturing sector but that the extent of the impact will depend on the duration of the measures.
“Anecdotal evidence suggests that manufacturers are facing delivery postponements instead of order cancellations,” she added. “This could explain the faster supplier deliveries with increasing order backlog.”
The electronics sector PMI also pulled back by 0.3 point from the previous month to post a slower rate of expansion at 50.4. This is the 10th month of expansion for the electronics sector, said SIPMM.
Ms Selena Ling, head of treasury research and strategy at OCBC bank, said the growth in the manufacturing and electronics PMI suggest that the “growth momentum for both sectors should sustain for the near-term”.
She added that the Phase 2 (Heightened Alert) restrictions “could be a temporary setback rather than a deal-breaker” especially since the economy is expected to gradually reopen after Jun 13.
READ: Singapore 'on track' to bring COVID-19 outbreak under control; curbs may be eased after Jun 13: PM Lee
Singapore put in place tighter COVID-19 restrictions almost three weeks ago to curb an increase in COVID-19 community cases. Under the new measures, dining-in has been disallowed and group sizes for gatherings limited to two people.
Prime Minister Lee Hsien Loong said on Monday that barring any super-spreader event or large clusters, Singapore “should be on track” to bringing the COVID-19 outbreak under control.
In an address to the nation, Mr Lee added that if the number of community cases falls further, the country should be able to relax existing restrictions under the Phase 2 (Heightened Alert) period after Jun 13, which is when the curbs are currently set to end.