Nikkei Singapore PMI shows Aug business conditions up slightly

SINGAPORE firms posted only a marginal improvement in overall operating conditions in August, according to the Nikkei Singapore purchasing managers' index (PMI) released on Thursday.

The headline PMI was at 50.8 in August - above the 50-point mark which signals an improvement in conditions over the previous month, but below July's 51.3 reading.

"(August's reading is) consistent with only a marginal pace of improvement," said Markit, the financial information services provider which compiles the index.

It added that output growth eased in August, with the rate dipping to a four-month low - although it "remained solid overall". The higher output was attributed to new product developments and improving client demand.

Said Annabel Fiddes, an economist at Markit: "Although new business from abroad improved, overall demand appears relatively muted as total new orders were unchanged from the previous month.

"Unless demand conditions start to improve, it's likely that output growth will slow further which could translate into more bad news for the labour market. Furthermore, weaker global growth amid fears of a slowdown in China adds to demand-side concerns, and could dampen the performance of the economy in upcoming months."

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). The latter covers only the manufacturing sector.

Like other depressed regional readings, both the manufacturing and electronics SIPMM PMIs for Singapore slipped further into contraction mode in August.

Overall PMI sank 0.4 point to 49.3, as new orders, new export orders, production output as well as input prices showed a further contraction.

The electronics PMI stayed below the 50-point mark last month as well, dropping 0.5 point to 49.0.