Singapore’s manufacturing PMI slips in June, denting hopes of economic revival

Manufacturing sector in Singapore weakened in June, denting hopes of revival in the economy amid an environment of global tension, financial turmoil and weaklings in overseas exports. New orders, new export orders, production and orders backlog indices continued to retract in June, while inventory and supplier deliveries both rose, weighing on the country’s manufacturing prospects.

The headline Purchasing Managers’ Index (PMI) slipped to 49.6, marginally lower from April and May’s 49.8, data released by the Singapore Institute of Purchasing & Materials Management (SIPMM), showed Monday. However, it remained slightly below the 50-point mark that separates expansion from contraction. A Bloomberg poll had expected PMI to remain steady at 49.8 in its earlier forecast.

"There is no light at the end of the Singapore manufacturing tunnel in 2H16, unlike the tentative green shoots seen in the other global/regional key manufacturing PMIs," OCBC said in its recent research note.

The report further added that domestic business confidence is expected to remain subdued in the coming months, especially in wake of growing uncertainty and ambiguity over the long-term consequences of Brexit.

The PMIs are expected to inch gingerly higher in the coming months. But that’s nothing more than mere seasonal effects, since manufacturers will usually ramp up their production to meet orders for the year end festive season demand in the third quarter, DBS reported.

"Without a sustained improvement in global demand, it is still a bleak outlook for the manufacturing sector after all," DBS commented in its research report.