Singapore's manufacturing growth at two-year low in January

SINGAPORE'S manufacturing growth slowed for the fifth straight month in January, with the electronics sector remaining in contraction for the third month in a row, according to the latest Purchasing Managers' Index (PMI) on Monday.

The overall manufacturing PMI for January was 50.7, down from December's 51.1 and the lowest reading since December 2016, although it still marked the 29th straight month of expansion. The survey-based index is a leading indicator of economic activity, with a reading of 50 or more indicating expansion.

The Singapore Institute of Purchasing and Materials Management (SIPMM), which compiles the data, attributed the lower reading to slower growth in new orders, new exports, factory output, inventory, and employment level. All other indicators were also down, with slower growth in finished goods, imports, input prices, and supplier deliveries. The order backlog index remained in contraction for the fourth straight month.

The electronics sector PMI declined 0.2 point to 49.6 in January, marking its third month in contraction. This was due to the key indicators of new orders, new exports, and employment dipping into contraction, as well as a second month of contraction in factory output.

There was also slower growth in inventory, finished goods, input prices, and supplier deliveries. Electronics imports contracted for the second straight month, and order backlog for the ninth straight month. However, SIPMM said that anecdotal evidence suggested that electronics manufacturers remain "cautiously optimistic of improved prospects going forward".

Singapore's figures complete a picture of regional weakness, with Nikkei Asean Manufacturing PMI figures showing slower conditions in six out of seven countries. The exception was Malaysia, which remained in contraction but to a lesser degree than in December. China's Caixin PMI also fell to 48.3 in January, down from Decmber's 49.7 and the lowest reading since February 2016. The group's director of macroeconomic analysis, Zhong Zhengsheng, however, noted that export orders had rebounded since the trade truce between the United States and China, with domestic manufacturing demand having shrunk instead.