Nov 6, 2012

Singapore - Singapore's PMI contracts for fourth time in October

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SINGAPORE: Singapore's manufacturing sector has contracted four months in a row in October, according to data released by the Singapore Institute of Purchasing & Materials Management (SIPMM) on Monday.

The country's Purchasing Managers' Index (PMI) was 48.3 points in October, compared with 48.7 in September.

A PMI reading of below 50 indicates that the manufacturing economy is generally declining.

The latest data showed a further decline in new orders, new export orders and production output.

In particular, experts note that the electronics sector recorded further declines in October.

The electronics index registered a 2.5 point drop over the previous month to reach 47.5

Singapore's weaker performance is in sharp contrast with the rebound recorded elsewhere in the region such as China, Taiwan and South Korea.

October data showed that China's Purchasing Manager's Index expanded to 50.2 in October from 49.8 in September. HSBC PMI reading for China also rose to 49.5 in October, although it's still in contraction territory. The bank's PMI readings for Taiwan and South Korea also rebounded.

Analysts say the region's rebound is due to year-end festive demand pick-up and recent product launches for consumer gadgets, like smartphones and tablets.

Singapore's electronics sector, on the other hand, remains dragged down by weak demand from the PC sector.

Mr Song Seng Wun, Regional Economist, Singapore, CIMB Research, said: "PC component parts and peripherals account for a disproportionate chunk, it looks like ... weak demand for PC parts and components have continued to be a big drag on Singapore tech and hence overall factory output. Whether Singapore's tech sector may revive in the coming months, (much) will depend on Microsoft and its launch of Windows 8, and the launch of its range of PCs where it might drive spending by businesses and consumers. If that happens, you may find demand for hard disks, PC parts and components."

Economists said most indicators are negative given the uncertain global environment.

But some analysts say the pick-up in economic activities from major regional economies may filter down to next month's Singapore PMI numbers.

Ms Janice Ong, Executive Director of Singapore Institute of Purchasing & Materials Management (SIPMM) said: "The overall new order intakes for both the domestic and overseas markets continued to contract and the latest reading of 46.5 recorded the lowest since Feb 2009. Nonetheless, anecdotal evidences of the survey suggested that the manufacturing sectors could possibly bottom out, and going forward the next month's PMI could point upwards with increasing economic activities from the major economies.

- CNA/de

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