Singapore factory activity improves in November but falls shy of expansion threshold

Singapore factory activity improves in November but falls shy of expansion threshold

factory Singapore
A worker at a manufacturing facility in Singapore. (Photo: TODAY)

SINGAPORE: Singapore's factory activity shrank for the seventh straight month in November but recorded a slower rate of contraction compared with the previous month.

November's Purchasing Managers' Index (PMI), which measures manufacturing activity and sentiment, came in at 49.8, according to data released by the Singapore Institute of Purchasing and Materials Management on Tuesday (Dec 3).

This was an improvement on October's 49.6 reading but just shy of the 50.0 mark separating expansion from contraction.

"The latest PMI reading was boosted by faster rates of expansion in both factory output and inventory, as well as slower contraction rates in new orders, new exports and employment," said the institute.

While the electronics sector contracted for the 13th straight month, the sector’s PMI improved by 0.4 to 49.7. This was attributed to slower contraction of new orders, new exports, factory output and employment, as well as a faster expansion rate in inventory.

Lingering concerns about the potential for a further escalation of global trade tensions into next year could be a contributing factor to November's PMI readings, said OCBC Bank's Head of Treasury Research and Strategy Selena Ling.

A cautious macroeconomic outlook for 2020 could be another factor, she added.


The improvement in PMI is in line with broad improvements seen in other Asian manufacturing indices, apart from Thailand and the Philippines, said Ms Ling.

"But as the US-China trade negotiations have been one step forward and one step back, the trajectory is not smooth sailing yet," she said, adding that apart from Vietnam, India and the Philippines, other Asian manufacturing PMIs are still "treading underwater below the 50 handle".

A slowdown could come in the first quarter of 2020 after seasonal Christmas orders, said Ms Ling.

"The domestic manufacturing sector may see modest positive growth in 2020, but we do not expect a sharp V-sharp recovery at this juncture," she added.

The United States and China have been locked in an ongoing trade dispute for months, with both sides imposing tariffs on billions of dollars worth of goods.

Earlier this month, both countries said they had agreed to roll back tariffs as part of the first phase of a trade deal.

READ: China, US agree to roll back tariffs as part of trade deal: Official

However, relations between the two countries worsened last week after US President Donald Trump signed into law legislation backing protesters in Hong Kong, prompting China to warn of “firm countermeasures”.

Source: CNA/nc