SINGAPORE - Growth in Singapore's private sector cooled in May, reflecting a slowdown in both output expansion and new business, according to the the latest Nikkei PMI survey released on Monday (June 5).
Foreign demand for Singapore goods and services tapered off while employment was broadly stagnant, the survey showed. On the price front, cost inflation slowed substantially, which led firms to only raise charges marginally.
The headline Nikkei Singapore Purchasing Managers' Index (PMI) eased to 51.4 in May from 52.6 in April, said IHS Markit, which compiles the survey.
The latest reading, while still signalling a modest improvement in the private sector, was the joint-lowest since last October.
Despite the slowdown in business activity growth, Singapore's private sector signalled greater business confidence in the year ahead on the back of planned business expansions, new marketing strategies and wider product variety. The survey's future output index rose to the highest level since last September.
After a solid start to the second quarter, signs of slowing client demand emerged in May. Growth in order book volumes eased to the lowest in 10 months, matched by a similar slowdown in exports, it said.
According to anecdotal evidence, difficult economic conditions and higher competition contributed to the slower rise in total new sales while greater foreign demand from China and Europe were offset by lower export growth to South-east Asia, said the report.
Following six months of solid rises in employment, workforce numbers barely rose in May, with the pace of increase the weakest since a decline was reported in October last year, said IHS Markit.
Most additional hiring was for temporary staff, according to survey respondents. There were also reports of layoffs.
"Decreasing pressure on operational capacity amid slower growth in demand may see Singaporean companies cautious about taking on more employees in the months ahead," said IHS economist Bernard Aw.
"Latest survey data raised concerns that Singapore's economic growth may decelerate in the second quarter, which added to the view that the Singapore's Ministry of Trade and Industry is right to be cautious about uncertainties and downside risks to growth," he said.