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Singapore manufacturing conditions seen stabilising with August PMI at 49.8

Friday, September 2, 2016 - 21:02

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SINGAPORE'S manufacturing sector contracted again for the 14th straight month in August, but signs of stabilisation could be seen, said observers.

SINGAPORE'S manufacturing sector contracted again for the 14th straight month in August, but signs of stabilisation could be seen, said observers.

Noticeably, the electronics cluster, which forms the bulk of factory output here, reported its first month-on-month expansion after contracting for 13 months.

For the whole sector, purchasing managers' index was at 49.8 in August, up 0.5 from July's, figures published by the Singapore Institute of Purchasing & Materials Management (SIPMM) on Friday showed.

Readings above 50 denote increasing rate of growth from the previous month; those below 50 mean a quickening pace of contraction.

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The SIPMM PMI comes a day after the Nikkei manufacturing PMI for Singapore, which also hinted at stabilisation in Singapore's manufacturing sector. This latter PMI was at 50 in August, stabilising after a seven-month decline.

Said OCBC economist Selena Ling: "Looking ahead, if the manufacturing and electronics PMI sustain the improving trend up to the fourth quarter of 2016, this could bode well for the second half's manufacturing growth. Nevertheless, our baseline is more for stabilisation rather than continued expansion for manufacturing growth in H2 2016."

SIPMM said that August's headline improvement was due to higher new orders and new exports, as well as higher factory output and employment.

The index for new orders was at 49.6, an improvement from July's 49 and June's 49.2.

Export orders also improved, reaching 49.3 in August. It was at 48.8 in July and 48.9 in June.

The production index headed near 50 in August. It was at 49.9, an increase from July's 49.3 and June's 49.4.

Hiring conditions also seemed to pick up, reaching 49.7 in August from July's 49.4. It was at 49.6 in June.

The electronics cluster performed better than the rest of the manufacturing sector in August, reporting a headline PMI of 50.2, up from July's 49.7. This meant that it broke its 13-month cycle of contraction.

"The electronics expansion reading was attributed to new expansion readings recorded in new orders, new exports, and factory output," said the release.

Singapore is plugged into the global smartphone manufacturing chain. This sector has been gearing up globally for the launches of Samsung Galaxy Note 7 - which is now being recalled by Samsung - and the expected Apple iPhone 7 in these few weeks.

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