Growth in private sector slows

New data from the broad-based Nikkei Singapore Purchasing Managers' Index indicates that weak foreign demand continues to weigh on new business growth, with a further steep decline in new export sales recorded in July.
New data from the broad-based Nikkei Singapore Purchasing Managers' Index indicates that weak foreign demand continues to weigh on new business growth, with a further steep decline in new export sales recorded in July. ST FILE PHOTO

Survey shows July staff count, purchasing activity also fell

Growth across Singapore's private sector eased last month as output and new orders expanded more slowly, according to a new survey.

The broad-based Nikkei Singapore Purchasing Managers' Index (PMI) came in at 50.7 for July, lower than June's 52.3.

Readings above 50 signal an improvement in business conditions on the previous month while those below indicate contraction.

Still, the data indicates that weak foreign demand continued to weigh on new business growth, with a further steep decline in new export sales recorded in July.

Both staff numbers and purchasing activity also fell over the month as companies adopted a more cautious approach.

Unlike a PMI survey released earlier this week that covers manufacturing firms only, the Nikkei measure is based on data from monthly questionnaires filled by executives at about 400 private sector firms.

  • Slower growth in US service sector, but euro area output jumps

  • WASHINGTON/LONDON • The US service sector grew at a slightly slower rate in July, while the euro area output unexpectedly accelerated to the highest in six months, data released by private gauges showed yesterday.

    The 55.5 reading in the Institute for Supply Management's (ISM) non-manufacturing index followed 56.5 in the previous month, the group's report showed yesterday. Readings above 50 signal expansion.

    The group's non-manufacturing survey covers an array of US industries including utilities, retailing, and healthcare, and also factors in construction and agriculture.

    Orders to the service producers that make up about 90 per cent of the economy rose to a nine- month high, pointing to further economic growth as manufacturing stabilises. But the growth proceeded at a slower rate, ISM said.

    Across the Atlantic, a gauge by Markit services in the euro area showed a jump, signalling that manufacturers and service providers are shrugging off concerns that the United Kingdom's vote to leave the European Union will harm business.

    The Purchasing Managers' Index for both industries rose to 53.2 in July from 53.1 in June, Markit Economics said. A July 22 flash estimate was for a drop to 52.9. For non-manufacturing, it was 52.9, higher by 0.1 percentage point from June data of 52.8.

    The increase "presents a slightly better picture" and "is especially encouraging as it suggests the region saw little overall contagion from the UK's Brexit vote", said Mr Chris Williamson, chief economist at Markit told Bloomberg.

    A pickup in private-sector activity is the latest sign of the region's resilience to the outcome of Britain's June 23 referendum rejecting EU membership.

These are selected to represent the structure of the economy and include companies from the manufacturing, services, construction and retail sectors.

"Weak global demand remained a key headwind to growth, with latest data showing a further sharp reduction in new export sales," said economist Annabel Fiddes at financial information services provider Markit, which compiled the survey.

This made companies relatively cautious about growth expectations in the near term, she added.

OCBC economist Selena Ling noted the data shows new export sales falling at the second-sharpest pace since 2012, behind April 2016.

"Many businesses could have adopted a wait-and-see attitude amid the Brexit-related uncertainties," she said.

The manufacturing PMI, compiled by the Singapore Institute of Purchasing and Materials Management, contracted for a 13th straight month in July with a 49.3 reading.

A version of this article appeared in the print edition of The Straits Times on August 04, 2016, with the headline 'Growth in private sector slows'. Print Edition | Subscribe