Singapore PMIs continue to disappoint

Singapore PMIs continue to disappoint, pointing to more downside risks on the manufacturing sector. Latest manufacturing PMI slumped to 48.6, down from 49.3 previously. This is the lowest reading since Dec12. Likewise, electronics PMI has also slipped to 48.5, from 49.0 in August. All sub-indexes are down, except the stocks of finished goods index, which reflects a build-up in unsold stocks and weakness in demand. While import index did rise, the odd of a pick-up in production and order in the near term is grim against the backdrop of the global doldrums. 

This latest set of PMI readings is consistent with the outcome in the region where PMIs of the key markets have all dipped lower. Latest August industrial production output has also fallen by 3.7% MoM sa and 7.0% YoY. This has re-affirmed the view that the manufacturing sector is already in recession. It has contracted by 3 consecutive quarters in year-on-year terms and in 3 out of the past 5 quarters on a sequential basis. In fact, risk is the manufacturing sector performance may worsen in the coming months given the dicey external environment.