Better times for private sector

Nikkei Singapore Purchasing Managers' Index for September hits 19-month high

A container terminal in Singapore. Export sales rose last month, for the first time since February this year.
A container terminal in Singapore. Export sales rose last month, for the first time since February this year. PHOTO: AGENCE FRANCE-PRESSE

Private-sector companies last month experienced the most significant improvement in operating conditions in more than a year, according to data yesterday.

The broad-based Nikkei Singapore Purchasing Managers' Index (PMI) came in at 52.9 for September, a 19-month high and up from August's 52.3 reading.

Readings above 50 signal an improvement in business conditions on the previous month, while those below 50 indicate a contraction.

September's lift came from increases in output and new business, which was boosted by higher export sales. Though the rise was modest, it was the first time export sales had increased since February, according to the survey.

However, companies remained cautious when it comes to hiring staff, adding to their payrolls only slightly last month. This contributed to the sharpest increase in the work backlog since the survey began in August 2012.

"This could prompt firms to raise output further over the coming months in order to help ease capacity pressures, particularly if client demand shows further signs of improving," said economist Annabel Fiddes at financial information services provider IHS Markit, which compiled the survey.

Unlike the PMI survey released earlier this week that covers only manufacturing firms, the Nikkei measure is based on data from monthly questionnaires filled by executives at about 400 private-sector firms. They include companies in the manufacturing, services, construction and retail industries.

OCBC economist Selena Ling said the latest data "bodes well for Singapore's fourth-quarter economic growth momentum", especially when taken alongside the manufacturing PMI numbers.

Manufacturing output expanded for the first time in more than a year last month, according to PMI data from the Singapore Institute of Purchasing and Materials Management.

"Nevertheless, the labour market softening is likely to persist. Both the manufacturing and services PMIs' employment gauges remain tepid and suggest that business hiring intentions remain cautious," said Ms Ling.

A version of this article appeared in the print edition of The Straits Times on October 06, 2016, with the headline 'Better times for private sector'. Print Edition | Subscribe