S'pore's PMI falls for 5th straight month
THE tough times show no sign of letting up for manufacturers, going by the dismal numbers out yesterday.
The Purchasing Managers' Index (PMI) - an early indicator of factory activity - fell again last month, the fifth straight month of decline.
The latest reading of 49.4 follows a score of 49.6 in March. A reading above 50 indicates growth.
Manufacturing has been hit hard by ongoing restructuring, rising business costs and the strength of the Singapore dollar, which has made exports more expensive.
These factors were reflected in last month's PMI, which pointed to a decline in both domestic and export orders amid tepid global demand.
Manufacturers' production, inventory and stocks of finished goods also declined, the data showed.
In particular, the running down in stocks of finished goods implies "cooling expectations among manufacturers", said DBS Bank economist Irvin Seah, who does not expect the sector's outlook to improve significantly in the coming months.
This was reaffirmed by a decline in companies' order backlog in the latest data, which was compiled by the Singapore Institute of Purchasing and Materials Management from a survey of more than 150 firms.
"This hints at significantly weaker demand and will dent hopes of a recovery in the second half of the year," Mr Seah added.
The PMI for the electronics cluster, which makes up a third of the manufacturing sector, sank to 49.1 last month after coming in at 50.1 in March.
This was the result of declines in new domestic and export orders, production, finished goods and imports.
The latest data indicates that the electronics PMI's brief foray into expansionary territory in March was unsustainable and the industry is "still stuck in this one-step forward, one-step back pattern", said OCBC Bank economist Selena Ling.
Last month's PMI underlines how the sector seems stuck in low gear.
Manufacturing, which makes up a fifth of Singapore's economy, has shrunk 2.5 per cent since the start of the year and was the main drag on economic growth in the first quarter.
It was a similarly gloomy story elsewhere in the region. China's official PMI came in at 50.1, the weakest reading for April since the series started in 2005.
South Korea's PMI fell to a six-month low of 48.8 last month on the back of poor export data, while Taiwan's fell to a 21-month low of 49.2, from 51 the month before.
A slower Chinese economy is "having a very significant impact on the growth outlook for Asia", said Mr Seah.
"This has been a challenging year, and we don't think things will improve significantly even in (the) second half."