No year-end lift for Singapore manufacturers amid lacklustre global outlook

Workers assemble protective masks at a manufacturing facility in Singapore.
Workers assemble protective masks at a manufacturing facility in Singapore. PHOTO: REUTERS

SINGAPORE - There will be no year-end festive cheer for the beleaguered manufacturing sector here.

The purchasing managers' index (PMI) - an early indicator of factory activity - contracted for the fifth consecutive month in November as lacklustre global demand continued to weigh on factories.

It is a similar story elsewhere in the region as growth in China continues to moderate. A private survey released earlier this week showed manufacturing activity in China - Singapore's largest trading partner - contracted for the ninth straight month in November.

Singapore's PMI posted a reading of 49.2 last month as new domestic and export orders continued to decline. While this was slightly higher than October's 48.9, it still came in below the key 50 mark, implying contraction.

The PMI for the electronics cluster, which makes up a third of Singapore's manufacturing output, came in at 49 for November, from October's 48.6.

This was its fifth consecutive month of contraction, as both domestic and export orders as well as production output and inventory fell.

However, there might be a silver lining, said DBS economist Irvin Seah. He noted that PMI readings have improved for two straight months from a trough in September.

"Though it may be premature to call this a trend, at least the numbers are heading higher," said Mr Seah.

Still, the caveat is that PMI statistics are not adjusted for seasonal factors, he noted. This means the uptrend might be attributable to manufacturers lifting production for the year-end festive season, or front-loading ahead of the Chinese New Year lull in early February. "Fingers crossed that this truly marks a trend and that the worst is behind," he added.

Elsewhere in Asia, manufacturing PMIs were "pretty soggy all around" in November, said Mr Frederic Neumann, co-head of Asian economics research at HSBC.

In China, the Caixin manufacturing PMI, which polls smaller companies, came in at 48.6 for November, up slightly from October.

Meanwhile, the official manufacturing PMI fell to a three-year low of 49.6. The manufacturing PMI for South Korea came in at 49.1, while Taiwan's was 49.5.

"(The numbers) are not pointing to a bounce in emerging Asia, and in the United States momentum is fizzling as well," added Mr Neumann.

Korea and Taiwan - viewed as reliable bellwethers for the global industrial cycle - have seen new export orders slide again, he noted. "We're bound to end the year on as soft a note as we started it. And things are not looking much more promising for 2016 either."

chiaym@sph.com.sg