Singapore manufacturing contracts for a full year with June PMI at 49.6

CONDITIONS in Singapore's manufacturing sector have slumped for a full year with June's headline Purchasing Managers' Index (PMI) undershooting expectations at 49.6.

A reading above 50 signals expanding activity from the previous month, while anything below indicates contraction. An earlier Bloomberg poll had expected June's PMI to come in at 49.8.

June's reading, released by the Singapore Institute of Purchasing & Materials Management (SIPMM) on Monday, came after the PMI held up in the preceding two months, though they still registered contractions. May and April were both at 49.8.

June's data also extended the manufacturing economy's contraction into its 12th month.

"The decline in reading was due to a contraction in factory output, and a faster rate of contraction in both new orders and new exports," said SIPMM.

The production index fell to 49.4 from May's 50.1. New orders retreated farther to 49.2 from 49.7 previously. The slump in export orders deepened to 48.9 from 49.4 in the preceding month.

In contrast, inventories expanded farther to hit 50.9 from May's 50.2. Supplier deliveries went up to 50.2 from 49.8 in the previous month.

Taken together, June's indices meant that demand and supply remained tepid in the near term for Singapore's manufacturers, while they continued to pile up on stocks, said Selena Ling, OCBC's head of treasury research and strategy.

"There is no light at the end of the S'pore manufacturing tunnel in the second half of 2016," she said.

"It remains unclear if the domestic manufacturing and electronics will resurface above the 50 handle anytime soon, notwithstanding the slight improvements elsewhere," she added.