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Singapore’s PMI eases a notch in May, but still in expansionary mode
Manufacturing activity in Singapore dialled back a notch in May, in line with economist expectations that the sector’s growth pace will gradually ease from last year’s highs, according to the latest purchasing managers’ index (PMI).
The barometer of industrial activity recorded a further dip of 0.2 point from the previous month to post a slower expansion of 52.7.
But even with a marginally lower reading, the sector has remained in expansionary territory for 21 straight months. A reading above 50 indicates growth, while one below points to contraction.
OCBC economist Barnabas Gan said: “Despite the slowdown, the expansionary manufacturing PMI print suggests that while some signs of caution can still be felt to date, the manufacturing momentum remains intact and is likely not facing a sharp moderation.”
Manufacturing makes up one-fifth of the economy, and is a key growth driver of the economy.
The latest PMI reading was attributed to a slower growth in factory output, as well as slightly slower growth in new orders, new exports, inventory, and employment.
The indicator for stocks of finished goods clocked its highest reading of 52.3 since February 2011, while the order backlog metric posted its lowest reading of 50.3 since June last year.
On the other hand, the electronics sector PMI – a subset of the main index – edged up 0.1 point to record a reading of 52.3. This is the 22nd month of improved conditions for the electronics cluster.
This was a result of faster growth in new orders, new exports, and factory output, but was dragged lower by the indicators of inventory and employment.
“Anecdotal evidence suggests that despite concerns amongst electronics manufacturers about a possible global trade war, several firms are developing their digital capabilities for high-value manufacturing,” said the Singapore Institute of Purchasing & Materials Management, which compiles the monthly PMI index based on a survey of purchasing managers in about 150 manufacturing firms.
May’s PMI, a leading indicator of manufacturing activity, comes just after the release of separate factory output data for April.
Industrial production, closely linked to gross domestic product, grew faster-than-expected by 9.1 per cent in April.
The PMI performances in the rest of the region were a mixed bag. Those with softer or neutral readings include China, Malaysia, South Korea, Taiwan and India. Economies that recorded stronger manufacturing conditions include Japan, Vietnam, Thailand, and the Philippines.