Singapore private sector firms see business improve markedly in June but also worrying fall in export orders

Private sector firms here saw the best improvement in overall operating conditions in five months in June but also a worrying fall in new export orders.
Private sector firms here saw the best improvement in overall operating conditions in five months in June but also a worrying fall in new export orders.PHOTO: AFP

SINGAPORE - Private sector firms here saw the best improvement in overall operating conditions in five months in June but also a worrying fall in new export orders, which declined for the fourth month in a row, and at a sharper rate than in May.

The Nikkei purchasing manager's index (PMI), which covers just private sector firms, jumped to 52.3 in June from 50.1 in May. Readings above 50.0 signal an improvement in business conditions on the previous month, while readings below 50.0 show a deterioration.

Markit, the financial services firm that compiles the index, said outout in June rose at a sharper rate as total new orders returned to growth. Though modest, it was the fastest rate of new order growth since March 2015, and ended a two-month sequence of reduction.

A number of companies commented that an improvement in underlying demand conditions and promotional activities had boosted sales.

External demand however remained a drag on overall new work, with export sales declining at a faster rate in June.

Said Markit economist Annabel Fiddes: "Singapore's private sector saw operating conditions improve at a faster rate at the end of the second quarter, with faster growth of output accompanied by a welcome upturn in new business.

"However, the marked fall in new export sales highlighted a fragile global economic environment, which weighed on overall new order growth in June. Furthermore, companies reported a reduction in staff numbers for the fourth successive month, albeit at a marginal pace.

"With rising uncertainty overseas, including the recent Brexit decision, it will be important to monitor the PMI data in the coming months to see whether growth momentum is sustained into the second half of the year."