Singapore's manufacturing expands for 20th straight month

SINGAPORE'S manufacturing sector saw its 20th straight month of expansion in April, though the rate of growth has steadied over the last six months, according to figures out on Wednesday.

April's Purchasing Managers' Index (PMI) was 52.9, marginally down from 53 in March, with a reading of 50 and above indicating expansion.

Based on a monthly poll of purchasing executives in over 150 industrial companies, the PMI is a leading indicator of economic activity. Since October 2017, the monthly reading has fluctuated between 52.6 and 53.1.

The Singapore Institute of Purchasing and Materials Management (SIPMM), which compiles the data, attributed April's marginally lower reading to a slower growth in new orders and new exports, and a slightly slower factory output.

Expansion was supported by higher inventory and employment levels. Of the index's indicators, inventory saw the fastest growth since July 2014, while finished goods stocks saw the fastest growth since February 2016. All other indicators also saw faster rates of expansion, with the exception of order backlog, which slowed to 50.7.

The electronics sector saw its 21st consecutive month of expansion with an April PMI of 52.2, down from 52.4 in March. This was the fourth straight month in which electronics - recently the main driver of manufacturing growth - grew at a slower rate than overall manufacturing.

SIPMM attributed April's figure to slower expansion in new orders, new exports, and factory output, with all other indicators recording faster rates of expansion.

Electronics inventory accumulation was at its highest since April 2011, while the electronics finished goods stock index was at its highest since December 2014.

OCBC head of treasury research and strategy Selena Ling expects manufacturing growth to ease to around 6.3 per cent year-on-year in the second quarter after its strong first quarter showing, and sees full-year manufacturing growth coming in around 4.5 per cent year-on-year.

She expects GDP (gross domestic product) growth to ease similarly, to 3.8 per cent year-on-year in the second quarter and with full-year growth "anchored around the 3.0 per cent handle".

Regional PMI readings paint a mixed picture for April. Japan's manufacturing sector saw quickening expansion, with April's PMI at 53.8, up from 53.1 in March. China also remained in expansion, with the Caixin PMI at 51.1, up fractionally from March's 51.0.

Indonesia, the Philippines and Vietnam also saw faster growth, while Taiwan remained in expansion but at its weakest rate since October.

In contrast, Malaysia and South Korea saw their manufacturing downturns intensifying. Thailand manufacturing faced its second straight month of deterioration, though at a slowing pace of decline.