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New Nikkei Singapore PMI shows improved business conditions in June

A NEW purchasing managers' index (PMI) for Singapore, released on Friday, shows that business conditions improved in June for the first time in three months.

The headline Nikkei Singapore PMI, which is produced by Markit and covers the manufacturing, services, construction and retail sectors, rose to 51.1 in June, up from 49.5 in May. This was driven by a sharp expansion in Singapore's private sector output in June, as companies hiked output due to the development and launch of new products.

A reading above 50 signals improved business conditions in Singapore, while one below shows deterioration. Markit surveys more than 400 private-sector companies in Singapore monthly, to compile the index.

Annabel Fiddes, economist at Markit, which compiles the survey, said the data signalled a "renewed upturn in overall business conditions in June, with output rising sharply and new orders reviving".

"That said, client demand remained relatively subdued overall, as the rates of total new order and new export business growth were only marginal," she said. As a result, firms remained cautious about purchasing activity and hiring policies - both the input buying and employment indicators declined slightly at the end of the second quarter.

"The data suggest that a stronger rebound in client demand may be required to ensure that growth momentum remains on an upward trajectory and to encourage job creation," Ms Fiddes said.

The Nikkei Singapore PMI covers a wider range of sectors and more companies than an existing PMI compiled by the Singapore Institute of Purchasing & Materials Management (SIPMM), which covers only the manufacturing sector with a survey of more than 150 industrial companies each month. SIPMM's manufacturing PMI also improved slightly in June to a reading of 50.4.