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Singapore’s manufacturing continues expansion
SINGAPORE – Electronics turned in a robust performance in August to help the overall manufacturing sector record its 24th month of expansion.
The Purchasing Managers’ Index (PMI) – a key indicator of economic activity – noted that the electronics sector logged a 0.4-point increase in August from July, to 52.0. A reading above 50 indicates expansion.
The increase was due to higher growth rates in new orders, new exports, factory output and employment.
That helped to lift the overall PMI by 0.3 points last month to 52.6 – manufacturing’s 24th straight month of expansion, according to the Singapore Institute of Purchasing and Materials Management (SIPMM) on Monday (Sept 3).
The reading is compiled based on a survey by the Institute of purchasing managers in around 150 manufacturing firms.
Analysts said the positive data out on Monday (Sept 3) suggests domestic manufacturing is holding up well against global uncertainties like the United States-China trade war.
August’s PMI was boosted by more new orders, which rose from 53.9 in July to 54.4 in August, as well as new exports, which grew from 52.6 to 53.2.
Factory output expanded faster last month as well, as did hiring, with the employment index up from 50.7 in July to 51.0 in August, its 12th consecutive month of expansion.
The inventory level recorded its lowest reading since August last year at 52.0, while the stocks of finished goods grew at a lower rate.
OCBC Bank’s head of treasury research and strategy, Ms Selena Ling, said the numbers suggested that domestic manufacturing “is withstanding the deterioration in the external economic environment due to the US-Sino trade war”.
Ms Ling added that the data also points to a broadening of manufacturing drivers beyond electronics to pharmaceuticals, especially in the run-up to Christmas.
She also noted that better numbers have been seen in Malaysia, Indonesia and the Philippines, saying that this could be partly due to the economies being “likely beneficiaries from the realignment of regional production lines amid the escalating US-Sino trade war and tit-for-tat retaliatory moves”.
However, other surveys of purchasing managers released on Monday as well reflected pressure on the key exporting destinations of China, Japan and South Korea.
Last month, China’s manufacturing sector grew at the slowest pace in more than a year. Export orders shrunk for a fifth month.
With the next tranche of US tariffs on US$200 billion of Chinese imports likely to come into force soon after the public comment period ends on Sept 6, Ms Ling said it remains to be seen if the August PMI optimism here will sustain into the fourth quarter of this year.
Source: https://www.straitstimes.com/business/singapores-manufacturing-continues-expansion