SINGAPORE - There was no reprieve for Singapore manufacturers last month as new orders and production continued to shrink.
The Purchasing Managers' Index (PMI) - an early indicator of factory activity - hit 48.9 in October, from September's 48.6. A reading below 50 implies contraction.
Yesterday's PMI - now in its fourth consecutive month of contraction - was dragged down by shrinking domestic and export orders, production output, inventory and employment.
The data also showed stocks of finished goods continued to rise, reflecting a build-up in unsold inventory amid weak demand, noted DBS economist Irvin Seah.
The indices for imports and employment are also trending lower, "suggesting a certain degree of cautiousness on the part of the manufacturers and a reluctance to ramp up production", he added.
The numbers reinforced the recent spate of poor data from the manufacturing sector, which makes up a fifth of the Singapore economy.
Output shrank 6.2 per cent in the July-to-September quarter compared with the same period a year ago. This came after a 4.8 per cent year-on-year decline in the preceding three months.
Mr Seah said external competition, rising business costs and manpower shortages are eroding the sector's medium-term prospects.
Singapore's woes seem more pronounced than elsewhere in the region where manufacturing output is showing signs of stabilising, but economists say tepid global growth continues to weigh on factories.
Yesterday's PMI data, which was compiled by the Singapore Institute of Purchasing and Materials Management from a survey of more than 150 firms, follows a private survey released on Monday which showed that China's factory activity fell for an eighth straight month in October, although at a less severe pace than in the previous month.
The preliminary Caixin China manufacturing PMI rose to 48.3 last month, compared with a reading of 47.2 in September, the lowest since March 2009.
Mr Frederic Neumann, co-head of Asian economics research at HSBC, noted that headline PMIs in China, Indonesia, Vietnam, Japan and Taiwan improved last month, but in most cases remained in contractionary territory.
While this may indicate that the region is on firmer ground, it is too early to hope for a sustained bounce, he added.
"One reason to suspect that this is a transitory effect is that manufacturers are still cutting jobs, or slowing hiring, for the most part. That's especially an issue in China, India and Korea," said Mr Neumann. "Overall, weaker labour markets raise the risk that consumer spending could slow further in the coming months."