S’pore factory activity expands for 9th straight month but pace slows
Bloomberg file photo
SINGAPORE — Manufacturing activity in Singapore rose for the ninth consecutive month in May, boosted by robust gains in the electronics sector, although the pace of overall expansion slowed.
The Purchasing Managers’ Index (PMI) fell by 0.3 point from the previous month to 50.8 points, showed data from the Singapore Institute of Purchasing and Materials Management (SIPMM) on Friday (June 2), but it remained above the 50-point mark that separates expansion and contraction.
The SIPMM said: “Anecdotal evidence in the latest PMI readings suggested that the local manufacturing sector was bolstered by strong growth in the electronics sector, amid continuing uncertainties in the global environment.”
The sub-index for electronics — which accounts for one-third of the Republic’s manufacturing performance — rose 0.8 point from the previous month to 52.4 points, the highest since October 2014 and marking the 10th straight month of expansion. The higher reading was attributed to increases in the key indicators of electronics new orders, new exports, factory output and inventory level, as well as employment within the segment, the SIPMM said.
The strength in the electronics segment helped to offset the contraction in overall employment, as well as slower growth rates in the key indicators of factory output, new orders, new exports, and inventory level. Meanwhile, a faster rate of expansion was recorded for stocks of finished goods, imports, supplier deliveries, and order backlog, the SIPMM data showed.
Credit Suisse economist Michael Wan said: “The overall PMI results fit with the broader picture which shows that regionally, there is a slowdown is manufacturing momentum, as seen in the Caixin/Markit PMI (China’s private sector manufacturing indicator), and regionally in Korea and Taiwan.” He warned that the growth in electronics is likely to ease as Chinese domestic demand wanes.
UOB economist Francis Tan said: “Looking at recent export numbers which have seen a slowdown, we may not see that kind of strength in the electronics sector for the second half of this year as seen in the previous nine months.”
Singapore’s non-oil domestic exports unexpectedly fell in April, dipping 0.7 per cent from the same month a year ago, due mainly to the slump in pharmaceuticals, although economists also noted the moderation in growth in the electronics segment. Shipments of electronics expanded by 4.8 per cent in April, slowing from the 5.2 per cent expansion in the previous month.
In China, the private sector Caixin/Markit manufacturing PMI fell to an eleventh-month low at 49.6 points last month from 50.3 points in April. The official China PMI, which mostly covers larger state-owned manufacturers, was unchanged at 51.2 points. Regionally, the PMIs for India and Taiwan stayed in the expansion zone but slowed from the previous month, while the PMI for South Korea remained in contractionary mode.
