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Singapore factory sentiment cools in April as exports, output slow

GROWTH in Singapore's overall manufacturing sector eased in April, a monthly survey has suggested, while the decline in electronics output has worsened.

Factory activity cooled across the board, after a mild uptick in March, according to the latest Purchasing Managers' Index (PMI), released on Friday.

Singapore's manufacturing activity grew for the 32nd straight month, but the overall PMI dipped by 0.5 point on the previous month to 50.3.

Meanwhile, the PMI for the electronics industry shrank again, falling to 49.5 from 49.8 before.

The PMI is an early gauge of industrial output, with readings above 50 showing expansion.

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The Singapore Institute of Purchasing and Materials Management (SIPPM), which compiles the local index, attributed the manufacturing sector's broad weakness to slower growth in metrics such as new orders, new exports, output and inventory.

Overall, order backlog shrank for the seventh month, while the contraction in backlog has now gone on for a full year in the electronics segment, according to the SIPPM data.

With the exception of finished goods and deliveries, all other electronics indicators stood in the red - with inventory, input prices and employment turning negative, compared with March.

"The finished goods index posted a slower rate of expansion, whereas the supplier deliveries index posted a faster rate of expansion," the SIPPM added.

Selena Ling, head of treasury research and strategy at OCBC Bank, deduced that the improvement in March's PMI was relatively short-lived.

"This set of PMI data reinforces our view that any uptick in Q2 2019 is unlikely to be very robust, notwithstanding there was an improvement seen in the business expectations survey for manufacturers," Ms Ling said in a flash note.

"As such, manufacturing growth may continue to contract marginally on-year in Q2 2019 as electronics momentum remains a drag in the near term."

Manufacturers have said that they now face more pressure because of global uncertainties, the SIPPM also reported.

Ms Ling noted: "The US-China trade war and the slowing Chinese economy have clearly taken a toll and, pending an immediate resolution of the former in terms of the much-touted upcoming trade deal, we may not see a rapid turnaround (in) H2 2019."

Separately, Barclays said on Friday that global manufacturing activity is headed for a slower second quarter, based on the six-year low in its global manufacturing confidence index in April.

"We acknowledge that survey-based measures might have overestimated the magnitude of the manufacturing slump and its spillovers into the overall economic activity in early 2019," analyst Iaroslav Shelepko wrote in a report.

But he added that "persistently low manufacturing PMI scores in the trade-related components across most of the countries", among other factors, point to a continued drag on production.

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