Singapore factory activity shrinks for 10th straight month

Pace of decline has slowed but poor outlook crimps sustained lift

Factory activity here shrank for the 10th straight month in April but at a slower pace, according to data out yesterday.

However, some economists say the chances of a sustained lift for manufacturers here are not high, given the lacklustre global outlook.

Regional manufacturing indicators also paint a mixed picture and Asia will likely see more sluggish growth ahead.

Singapore's Purchasing Mana- gers' Index (PMI) - an early indicator of manufacturing activity - came in at 49.8 last month, up slightly from March's 49.4 reading.

A reading below 50 indicates contraction.

The modest rise came as domestic and export orders, production and employment shrank at a slower rate, said the Singapore Institute of Purchasing and Materials Management, which compiles the index.

Singapore's Purchasing Managers' Index - an early indicator of manufacturing activity - came in at 49.8 last month, up slightly from March's 49.4 reading. Manufacturing, which makes up a fifth of the Singapore economy, has been hit hard by tepid global growth and ongoing restructuring.

The electronics sector posted a PMI reading of 49.5 last month, up slightly from 49 in March.

The data is compiled from a monthly poll of purchasing executives at about 150 industrial companies here.

OCBC economist Selena Ling said the numbers pointed to "broad- based improvements", which might suggest "nascent signs of a near-term bottom" for the beleaguered manufacturing sector.

Manufacturing, which makes up a fifth of the Singapore economy, has been hit hard by tepid global growth and ongoing restructuring.

DBS economist Irvin Seah is less optimistic about the sector's prospects, however, noting that PMI data is not adjusted for seasonal factors.

A similar slight uptick occurred last year after the Chinese New Year, when manufacturing PMI ventured briefly into expansionary territory in May and June before eventually slipping back into contraction again from July, said Mr Seah.

"It remains to be seen whether history will repeat itself. Chances of a sustained improvement in PMIs are not high, judging from the outlook in the global economy," he added.

Factory output was similarly lacklustre elsewhere in the region.

Japanese manufacturing activity shrank in April at the fastest pace in more than three years, while weakness in new orders and exports dragged on Taiwanese PMI.

China's official PMI reading was barely positive at 50.1, weaker than expected in the light of aggressive pro-growth policies which have been rolled out by policymakers.

A separate private survey of China's manufacturing activity - the Caixin Manufacturing PMI - fell to 49.4 in April, missing economists' estimates for 49.8 and down from 49.7 in March.

A version of this article appeared in the print edition of The Straits Times on May 04, 2016, with the headline 'Singapore factory activity shrinks for 10th straight month'. Print Edition | Subscribe