SINGAPORE: Growth in Singapore’s manufacturing sector moderated in February following an eight-year-high reading the previous month, largely due to a pullback in new orders and output, particularly in the electronics segment.
The Purchasing Managers' Index (PMI) - an early indicator of manufacturing activity - came in at 52.7 points in February, a dip of 0.4 point from January, according to data released by the Singapore Institute of Purchasing and Materials Management (SIPMM) on Friday (Mar 2).
Despite the lower reading, February’s PMI records the 18th consecutive month of expansion for Singapore’s manufacturing sector.
A PMI reading above 50 indicates that the manufacturing economy is generally expanding, while a reading below 50 indicates that it is generally declining.
SIPMM said that February’s PMI was dragged lower largely by the electronics segment, which saw slower growth in factory output, new orders, imports, input prices, employment, and new exports.
As a result, PMI for the electronics sector came in at 52.1, down 0.8 point from January and the lowest reading in eight months.
Nevertheless, the electronics sector has now recorded its 19th month of consecutive expansion.
CHINESE NEW YEAR COULD HAVE SKEWED READINGS: OCBC ANALYST
Ms Selena Ling, head of treasury research and strategy at OCBC Bank, said that the Chinese New Year festive season may have skewed readings in January and February, noting mixed PMIs in other Asian economies during the same period.
While she said that Singapore’s February PMI reading had come in lower than market expectations for 53.1, “outstanding” industrial production expansion of 17.9 per cent year-on-year in January could have contributed to some “frontloading ahead of the Chinese New Year festive season and a moderation thereafter”.
“Looking ahead, we do not expect that the double-digit expansion in the January 2018 manufacturing output can be sustained,” said Ms Ling.
She added that the manufacturing growth for the first quarter of the year as well as the full year are estimated at a “still healthy” pace of 6.7 per cent year-on-year and 4.9 per cent year-on-year respectively.