Business

Manufacturing continues expansion for 19th straight month

Singapore's PMI continued expansion broad-based, with electronics growing for the 20th month in a row

Manufacturing saw its 19th straight month of expansion last month, with the Purchasing Managers' Index (PMI) edging up to 53 from an earlier 52.7.

This was a notch higher than economists' expectations of 52.8, according to a poll by Bloomberg.

The PMI, based on surveys, is a leading indicator of economic activity. The higher the reading is above 50, the faster the rate of expansion for the sector from the previous month.

The latest PMI reading was attributed mainly to faster growth in factory output, as well as higher new orders and new exports, according to results released yesterday by the Singapore Institute of Purchasing and Materials Management (SIPMM), which compiles the data.

"The higher PMI reading was broad-based across most manufacturing sectors, indicating the resilience of the sectors," said SIPMM.

Indicators that recorded a faster rate of expansion included inventory, finished goods stocks, imports, order backlog and supplier deliveries.

Those that saw a slower rate of expansion were input prices and employment.

The electronics sub-sector, which has been leading manufacturing output growth thus far, saw an increase of 0.3 point from the previous month at 52.4.

This is its 20th consecutive month of expansion and the highest reading since April 2011.

The sector's higher PMI reading was led by a faster expansion in factory output, inventory, new orders and new exports.

Even as Singapore's manufacturing sector continues to power along, PMI readings for most of the region declined.

Japan's headline PMI numbers were down for a second consecutive month, but remained in the expansionary zone at 53.1. China's Caixin PMI fell to 51 last month, down from 51.6 in February - its weakest reading since November last year.

Taiwan, Thailand, Malaysia, Vietnam, South Korea and Indonesia all saw softened manufacturing PMIs. The only exceptions last month were Myanmar and the Philippines.

With the retreat of most Asian economies in manufacturing and the looming threat of a trade war, economists are cautious about Singapore's manufacturing outlook.

OCBC economist Selena Ling said: "We remain reluctant to upgrade our full-year 2018 GDP growth forecast, which remains at 3 to 4 per cent year-on-year for now, given the escalating US-China trade tensions which could weigh on business confidence and market sentiments in the near term."

While DBS economist Irvin Seah noted that the outlook for the manufacturing sector has remained sanguine on the back of the synchronised global recovery, many manufacturers here are "probably near the peak of their utilisation rate".

"Any further growth in the manufacturing sector would have to be driven by investment in production capacity," he added. - THE STRAITS TIMES

BUSINESS & FINANCE