Companies here enjoyed a slight improvement in operating conditions last month, but risks loom that growth could slow further given the shaky outlook, a new survey of a wide range of businesses has found.
The Nikkei Singapore purchasing managers' index (PMI), out yesterday, had a headline PMI of 50.8 last month, below July's 51.3. A reading above 50 implies expansion.
"Although new business from abroad improved, overall demand appears relatively muted as total new orders were unchanged from the previous month," said Ms Annabel Fiddes, an economist at Markit, the financial information services provider that compiles the survey.
The rate of output growth dipped to a four-month low but "remained solid overall", the Markit report said. Some growth could be attributed to "new product developments and improving client demand".
The Nikkei Singapore PMI is based on data from monthly replies to questionnaires sent to executives at more than 400 private sector firms, selected to represent the structure of the local economy, including manufacturing, services, construction and retail.
Another PMI statistic covering just manufacturing, released on Wednesday, showed factory activity here shrank last month, for the second month running.
The index, compiled by the Singapore Institute of Purchasing & Materials Management, fell to 49.3 last month from 49.7 in July.
Manufacturing, which makes up a fifth of Singapore's economy, has been hit hard by restructuring, rising costs and tepid global demand.
The Nikkei PMI survey found firmer demand led companies to increase purchasing activity for the second straight month last month. The rate of growth, though modest, was the fastest seen in a year.
But Ms Fiddes said: "Unless demand conditions start to improve, it's likely that output growth will slow further. Weaker global growth amid fears of a slowdown in China adds to demand-side concerns, and could dampen the performance of the economy," she added.
The report showed private sector firms registered a small decline in staff numbers last month, following a modest expansion in July. Employment slid largely as those who resigned were not replaced.