SINGAPORE factory activity ended a months-long slowdown to bounce back in April, on expansions in new orders, new exports, factory output and employment. Still, input prices continued to climb, amid industry concerns about supply crunches and cost pressures.

The Purchasing Managers’ Index (PMI), an early gauge of manufacturing sentiment, rose to 50.3 points, from 50.1 in March, according to the latest survey from the Singapore Institute of Purchasing and Materials Management (SIPMM) on Wednesday (May 4).

Meanwhile, the reading for Singapore’s linchpin electronics industry increased to 50.7 points, from 50.4 before.

UOB economist Barnabas Gan, who said that the reading was in line with recent high-frequency data, said in a note: “The increase in April’s PMI reading was supported by Singapore’s continued recovery in its trade and manufacturing sectors…

“Our view that Singapore’s manufacturing sector is one of the key economic support pillars remains unchanged.”

PMI scores above 50 points indicate an expansion, and those below 50, a contraction. Headline readings had been slipping since the start of the year, though they remained expansionary.

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New orders, new exports and factory output were up across the board, with electronics output returning to positive territory at 50 points, from a contractionary 49.6 in March.

Inventory shrank more slowly, as readings increased to 49.9 points overall in April, from 49.6 before, and 49.3 points in electronics, from 49.2 previously. The employment index grew to 50.8 points overall, up from 50.6 in March, and to 51.4 points in electronics, up from 51.2 in March.

Yet that came as the overall input prices index hit a score of 52.1 - its highest level since October 2013. The electronics input prices reading stood at 52.5 points, up from 52.3 previously.

Supplier deliveries index readings fell month on month - to 50.1 points overall, from 50.3 before, and 49.6 points for electronics, from 49.8 before. Stock of finished goods also retreated to 49.7 points overall, from 49.8 in March, and 49.2 in electronics, from 49.4 previously.

“There appears to be no end in sight to the Russia-Ukraine conflict, and local manufacturers are increasingly concerned about the rising energy cost, supply disruptions, and inflationary pressures,” said Sophia Poh, SIPMM vice-president of industry engagement and development.

Selena Ling, chief economist at OCBC, added in a note that “imported inflation remains a real challenge, especially with energy prices remaining buoyant”.

“The challenges may lie more on the supply side with very real price pressures even if global demand conditions hold up,” she said, citing lockdowns in China as another challenge.

Indeed, Gan noted that Singapore’s latest headline PMI reading remains below the average of 50.8 points seen in 2021. Separately, regional manufacturing sentiment also appears mixed.

Deutsche Bank said in a note on Apr 27 that “rising Omicron cases in China are adding pressure on already disrupted supply-chains and may be weighing on Asean trade” as of March, as South-east Asian manufacturing has close ties with the Chinese economy.

The JPMorgan Global manufacturing PMI reading ebbed to a nearly 2-year low of 52.2 points in April, from 52.9 in March, which the report’s authors said reflected the downturn in China.

China’s official manufacturing PMI score plunged to a 2-year low of 47.4 in April, while the private-sector Caixin index - which focuses on smaller and external-oriented manufacturers - dropped from 48.1 in March to 46 in April, in the biggest fall since the start of the pandemic.

Similarly, the S&P Global Taiwan manufacturing PMI declined to 51.7 in April, from 54.1 in March, on falling output and employment readings and “stagnant sales” in new orders.

On the other hand, the headline S&P Global Thailand manufacturing PMI ticked up to 51.9 in April, from 51.8 before, while the house’s Vietnam manufacturing PMI stayed flat at 51.7.

Still, the Deutsche Bank note last week added that “Asean manufacturers overall remain confident about their business outlook on a 12-month time-horizon”, despite the impact from China.

“Growth showed greater resilience outside of China though we still don’t have all the details from Asia to assess the extent of spillover,” said Olya Borichevska, global economist at JPMorgan, in the bank’s composite PMI report. “It appears that prices are once again on the rise.”

While SIPMM’s Poh said of Singapore that “the latest PMI readings bode well for the manufacturing sector”, Ling still warned that factories “may see growth momentum moderate in the second quarter of 2022 onwards”, especially against a high year-ago base.

OCBC has forecast full-year manufacturing growth of around 3.5 per cent, while UOB expects a rosier 4 per cent, as Gan said “global trade activity is expected to stay buoyant this year and underpin the positive outlook for the manufacturing sector”.