Nikkei Singapore PMI signals 'near-stagnation' in business activity

Flats being constructed in Singapore on Sept 7.
Flats being constructed in Singapore on Sept 7.PHOTO: REUTERS

SINGAPORE - A sharp fall in new business and a slight drop in employment last month has sent business conditions into "near-stagnation", fresh data shows.

The Nikkei Singapore Purchasing Managers' Index (PMI) - a proxy for business activity - fell to 50.2 in October, down from a seven-month high of 51.4 in September.

Readings above 50 signal an improvement in business conditions over the previous month, while readings below 50 show a deterioration.

This means overall business activity rose slightly in October, albeit at the slowest pace in six months.

Ms Annabel Fiddes, an economist at Markit, which compiles the survey, said the data pointed to weak demand conditions.

"This was highlighted by new orders falling at the second-fastest rate in over three years," she said in a statement on Wednesday (Nov 4). "Consequently, companies continued to cut back on their input buying and trimmed their staff numbers in October, suggesting that growth expectations remain muted.

"Unless there is an upturn in new orders, companies may struggle to sustain the current solid sequence of business activity expansion, which in turn could lead to more bad news for the labour market."

The Nikkei Singapore PMI is based on data compiled from monthly replies to questionnaires sent to executives in over 400 firms across sectors, including manufacturing, services, construction and retail.

An official PMI representing only factory activity out Tuesday indicated a fourth consecutive month of contraction in the manufacturing sector last month, with a reading of 48.9, from 48.6 in September.