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Singapore manufacturing growth slows for sixth straight month in Feb

SINGAPORE'S manufacturing growth continued its steady decline for the sixth straight month in February, with the electronics sector seeing contraction for the fourth month in a row, according to Monday's release of the latest Purchasing Managers' Index (PMI), a leading indicator of economic activity.

The overall manufacturing PMI was 50.4 in February. This was down from January's 50.7 and the lowest reading since November 2016, when it was 50.2. Nonetheless, February marked the 30th straight month of expansion, as indicated by a reading of 50 or more on the survey-based index.

OCBC Bank head of treasury research and strategy Selena Ling said the easing PMI was not unexpected given regional softness and the Chinese New Year holidays in early February. Given the new figures, she lowered her forecast for first-quarter manufacturing to a 0.5 per cent contraction year-on-year, and her full-year GDP growth forecast to 2.3 per cent year-on-year, down from an earlier 2.7 per cent prediction.

The Singapore Institute of Purchasing and Materials Management, which compiles the data, attributed the lower reading to slower growth in new orders, new exports, factory output, inventory, and employment level. Of the other indicators, only supplier deliveries improved. Finished goods and imports saw slower growth, while input prices sank into contraction, ending an 18-month expansion streak. The order backlog index remained in contraction for the fifth straight month.

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The electronics sector PMI remained in contraction for the fourth straight month in February, edging down 0.1 point to 49.5. New orders, new exports and employment stayed in contraction for a second month, while factory output saw its third month of contraction. However, the weaker reading was cushioned by the inventory index, which saw faster expansion. Supplier deliveries and input prices stayed in expansion, while finished goods and imports saw contraction. The electronics order backlog saw its 10th straight month of contraction.

Noting the weakness in these underlying indicators, Ms Ling said: "This suggests that the soft patch in electronics is likely to be sustained for the next few months and it is too early to call for a turnaround in this sector."

Singapore's February showing was part of a mixed Asean picture, with Nikkei manufacturing PMI figures showing Thailand and Malaysia in decline, but Myanmar, the Philippines, Vietnam and Indonesia in expansion. The Caixin China general manufacturing PMI recovered from January's recent low to hit 49.9 in February, signalling broadly stable operating conditions.