New PMI data shows gloomy start to Q2

Operating conditions for companies here deteriorated last month, according to data released yesterday which pointed to a gloomy start to the second quarter.

The Nikkei Singapore purchasing managers' index (PMI) registered a reading of 49.4 in April, down from 52.0 in March. A reading above 50 signals an improvement in business conditions on the previous month.

This was the index's first contractionary reading since last May, and also the lowest reading since November 2012. It showed that "operating conditions deteriorated across Singapore's private sector at the start of the second quarter", said Ms Annabel Fiddes, an economist at Markit, the financial information services provider that compiles the survey.

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.

A decline in total new work led to the weakest expansion of output since September 2013, with the data suggesting that foreign demand was particularly weak, Ms Fiddes said of the data.

"Companies also recorded further falls in purchasing activity and employment, albeit marginal, while stocks of inputs declined markedly, indicating that expectations for growth in the coming months remain relatively muted," she added.

A separate PMI statistic covering just manufacturing and released on Wednesday showed factory activity here shrank last month for the 10th month running.

OCBC economist Selena Ling said the latest Nikkei PMI data indicates that domestic business confidence has been dented amid weaker external demand conditions since the start of the year.

"This data reinforces our view that second-quarter growth is likely to be lacklustre, and should the first-quarter flash growth estimates... be revised down, the probability of a technical recession remains on the cards," said Ms Ling.

A version of this article appeared in the print edition of The Straits Times on May 06, 2016, with the headline 'New PMI data shows gloomy start to Q2'. Subscribe