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AlwaysFree: Singapore Factory Output PMI Declining For Five Straight Month

Author: SSESSMENTS

Singapore’s factory output is still declining for a fifth consecutive month in June. Data released from the Singapore Institute of Purchasing and Materials Management (SPIMM) showing the country’s PMI reading is at 48.0, below the neutral threshold of 50.0. The sector making the most drag in the overall PMI recognized as the electronics sector with a 47.6 reading. PMI reading below 50.0 indicates a decline, while above 50.0 shows expansion. 

However, June reading shows a better figure than previous months, at 46.8 in May and 44.7 in April, while April recorded as the lowest since November 2008 during the global financial crisis. The easing of circuit breaker measures has enabled more factories restarting the operations, but the moves were dragged by sluggish global demand. There are some PMI sub-indices that record improvements, such as new exports, factory output, new orders, employment and supplier deliveries. Slower contractions are also seen in order backlog, input prices and imports sub-indices. The SPIMM also noted that local manufacturers are worried about weaken global demand in the cause of the pandemic along with the trade disputes of the major economies. 

The manufacturing sector brings an opportunity to boost Singapore’s economy, and until the end of the year, the country will still be an outperformer, though the outlook seems challenging, DBS Bank’s senior economist Irvin Seah said. Even that, the recovery might not be even and not all will do well.

Another PMI reading by IHS Markit shows a 27.1 point output rebound, reaching a 43.2 in June.

Referencing the readings by SPIMM and IHS Markit, United Overseas Bank (UOB) economist Barnabas Gan notes that a sustained weak global demand landscape persists and the uptick at the introduction of Phase Two could only partially offset the lacklustre economic activities elsewhere. The contraction in both SIPMM and IHS Markit’s PMI for May indicated further drag on the country’s manufacturing sectors, as the key manufacturing sectors such as biomedical manufacturing could stay stagnant for the next half years. The segment for the sectors are only less than 20% of total industrial production, and biomedical manufacturing subsectors, the pharmaceutical exports only accounts for 9.9% of total non-oil exports. The worsening of the pandemic will prove to be more harmful for the country’s manufacturing ecosystem. 

Another analyst said though the PMI expected to recover above 50 in the coming months, the increase will be diminished by the repressed global economic conditions.

Tags: All Products,AlwaysFree,Asia Pacific,English,SEA,Singapore

Published on July 7, 2020 6:23 AM (GMT+8)
Last Updated on July 7, 2020 6:23 AM (GMT+8)