Singapore’s PMI rises further in January, echoing region’s improved factory activity
Tessa Oh
SINGAPORE’S manufacturing sentiment improved again in January, as regionwide factory activity continued to recover.
The purchasing managers’ index (PMI) edged up to 50.7, a 0.2 point gain from the previous month, data from the Singapore Institute of Purchasing and Materials Management (SIPMM) on Friday (Feb 2) indicated.
A reading above 50 on the index indicates growth from the previous month, while one below 50 points to a contraction.
January’s data marked the fifth straight month of continuous expansion and was also the highest reading since December 2021.
Meanwhile, the lynchpin electronics sector expanded for the third consecutive month in January, and at a faster rate than the previous month. The sector gained 0.4 point to hit 50.6.
Stephen Poh, SIPMM’s executive director, said: “The new year augurs well for the manufacturing sector as it remains on the expansion track for the fifth month, despite the ongoing geopolitical risks.”
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While local manufacturers face slower supplier deliveries due to disruptions in global supply chains, they are still cautiously optimistic on manufacturing growth this year, he added.
OCBC chief economist Selena Ling said the improved performance “augurs well for the recovery of manufacturing, especially the electronics sector, in the first quarter of 2024”.
She noted that January’s print was also consistent with the latest business expectations survey by the Economic Development Board, which showed that a net weighted balance of 10 per cent of manufacturing firms anticipate improved business conditions for the next six months, compared to the fourth quarter.
The strong improvement in the electronics sector’s PMI is an “affirmation of the ongoing recovery in the electronics sector, with a projected upturn through 2024”, said UOB associate economist Jester Koh.
But sequential momentum for Singapore’s factory output could remain weak in the coming months as external demand continues to be weighed down by tight financial conditions stemming from an elevated interest rate environment in the United States and the European Union, noted Koh.
Ongoing stresses in the property sector in China could also dampen consumer and business sentiment, he added.
Another area to watch would be the ongoing tensions in the Red Sea, which may cause supply chain disruptions or delays, said Koh and Ling.
“At this juncture, geopolitical uncertainties continue to exert an influence on global supply chain recalibrations,” said Ling.
Most regional economies recorded improvements in January, though some of them still remained in contraction mode.
China’s official manufacturing PMI rose 0.2 point to 49.2 in January. The Caixin PMI, derived from smaller private manufacturers, stayed flat at 50.8.
In South Korea, the S&P Global Manufacturing PMI nudged up 1.3 points to 51.2, while Taiwan’s S&P Global Manufacturing PMI climbed 1.7 points to 48.8.
Closer to home, the S&P Global Thailand Manufacturing PMI rose 1.6 points to 46.7. The S&P Global Indonesia PMI went up 0.7 point to 52.9.
Bucking the trend was the Philippines. The S&P Global Manufacturing PMI slipped 0.6 point to 50.9 – but remained in expansionary mode.
“Overall, we see a broad trend for improvements in the regional manufacturing cycle, especially in the more export-oriented economies, but the pace remains gradual,” said Barclays economists Brian Tan, Rahul Bajoria, Shreya Sodhani, Bum Ki Son and Amruta Ghare.
Key developments to watch include whether export orders continue to increase, and if shipping disruptions in the Red Sea translate into delays in transportation and increased input costs, they added.
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