SINGAPORE - August was an especially turbulent month for the global economy and unsurprisingly, offered no respite for beleaguered local manufacturers, according to data out on Wednesday.
The Purchasing Managers’ Index (PMI) – an early indicator of factory activity – hit 49.3 last month, following a reading of 49.7 reading in July. A reading below 50 implies a contraction.
Economists say factory output is sliding across the region with few prospects for a quick rebound.
Manufacturing, which makes up a fifth of Singapore’s economy, has been hit hard by restructuring, rising costs and tepid global demand.
Wednesday’s data showed declines in new orders, new export orders, production, inventories, imports and employment.
The data was compiled by the Singapore Institute of Purchasing and Materials Management from a survey of more than 150 firms.
The PMI for electronics, which makes up a third of the manufacturing sector, dropped to 49.0 last month after July’s 49.5 reading.
The numbers are “indicative of broad-based weakness, so there is no light at the end of the tunnel at this juncture”, said OCBC economist Selena Ling.
She said Singapore’s weak readings are consistent with lacklustre numbers in China, Taiwan, South Korea, Malaysia and Indonesia.
The tepid regional outlook could raise the odds for a technical recession – two consecutive quarter-on-quarter declines in GDP – this quarter if the services sector also falters, Ms Ling added.
Wednesday’s PMI data came alongside a Monetary Authority of Singapore survey showing that economists now tip a 2.7 per cent contraction in manufacturing this year. The same poll in June had tipped growth of 0.5 per cent.