SINGAPORE'S manufacturing slump is likely to continue for some time but the decline is finally showing hints of bottoming out.
Signs of stabilisation have appeared in the Purchasing Managers' Index (PMI), a forward-looking indicator of factory output updated every month.
Last month's reading, released yesterday by the Singapore Institute of Purchasing and Materials Management (SIPMM), signalled that manufacturing activity shrank for the fifth month in a row.
But the contraction was slightly smaller than in December, which could be a good sign.
'We've seen some marginal improvement in PMI numbers in China, India and even from Europe,' said HSBC economist Prakriti Sofat.
'December was terrible for everybody, but January seems to be indicating some sort of stabilisation, or at least that the pace of decline is slowing.'
Mr David Cohen of Action Economics agreed, saying that China's PMI, like Singapore's, edged up for a second straight month last month.
Still, that does not necessarily mean a recovery has arrived or is even coming soon. 'There's some light at the end of the tunnel, but the tunnel is still long,' said Ms Sofat.
'Manufacturing production will likely contract further in the first quarter of this year,' Mr Cohen predicted, adding that while production output and new orders edged up last month, employment continued to slip, indicating continued layoffs.
The PMI posted a reading of 45 last month, a marginal increase of 0.2 points over the previous month's figure. Any reading below 50 indicates a contraction in the manufacturing economy.
