Singapore's private sector growth indicator slips to 4-month low

The Nikkei PMI came in at 51.4 down from 51.6 in Jan. The Feb SIPMM indicator was also down to 50.9 from 51.0.

Singapore manufacturing output
A general view of factories at an industrial park in Singapore September 16, 2014. Reuters

Singapore's private sector growth indicator has dropped to a 4-month low in February, due to slower expansions in output, new orders and hiring, according to the headline Nikkei PMI data released on Friday (March 3)

The Nikkei Singapore Purchasing Managers' Index came in at 51.4 for February, marginally lower than 51.6 in January.

Surveyors IHS Markit said foreign sales also declined, while further stock depletion weighed on the index though higher buying levels continued to be reported.

The survey also pointed to decreasing inflationary pressures while the business sentiment remained negative.

"Inflationary pressures seemed to have subsided, as costs rose at a slower rate compared to January. Subsequently, companies only raised prices for their products and services moderately. That staves off concerns that consumers may face increasingly higher inflation in the months ahead," said Bernard Aw, Economist at IHS Markit.


IHS Markit said Singapore's private sector businesses remained pessimistic about their output levels in the year ahead.

The pessimism is because of slowing economic conditions, geopolitical uncertainties and low growth in certain sectors such as marine engineering and construction, Aw said.

"The moderating growth trend in Singapore's private sector economy continued on the back of slower expansions in both output and new orders. Lower export sales were seen for the first time since August 2016. All of this led to companies becoming more conservative in hiring."

Employment levels grew at the slowest in three months during February, he noted.

IHS said the recently announced budget was a mildly expansionary one with several fiscal measures that will help support economic expansion.

"In particular, the bringing forward of public infrastructure projects should benefit the flagging construction sector. Additionally, corporate and personal income tax rebates could also boost investments and consumption."


Singapore's manufacturing sector continued to expand for the sixth straight month in February though at a slower rate as factory output and new orders have slowed, the Singapore Institute of Purchasing & Material Management said on Thursday (March 2)

The Purchasing Managers' Index reading for February was 50.9, down from 51.0 of January. The electronics sector PMI has dropped to 51.4 from 51.8.

The SIPMM said the slower expansion reading was attributed to a slower rate of expansion in factory output, new orders, new exports, and lower imports.

At the same time, the 6th month of consecutive expansion, saw all the sub-indicators showing expansion readings, the institute noted.

"Inventory and stocks of finished goods expanded at a slightly faster rate, indicating stock accumulation in spite of higher input prices. Manufacturing employment remained on the expansion track for the second month after posting contractions since November 2014."

SIPMM said the latest readings of the PMI indicated a gradual expansion of the manufacturing sector amidst a global environment that is fraught with uncertainties.

The slowdown in the electronics sector from the previous month was attributed to a drop of 0.6 point in factory output, as well as slower expansion in new orders, new exports, imports, and employment.

"Both the inventory and stock of finished goods recorded slightly faster rate of expansion. Electronics order backlog index maintained expansion reading for the second month, and supplier deliveries reverted from contraction to a moderation."

The latest readings of the electronics sector indicated a strengthening growth in the months ahead, and the sector reading has now expanded for the 7th consecutive month, the SIPMM said.

A reading above 50 indicates that the manufacturing economy is generally expanding and that the economy is generally declining when the reading falls below 50.