S'pore factory growth slows for third month

The electronics sub-index posted a drop of 0.6 point from October to 49.9, which indicates contraction. Despite the contraction, the electronics employment index recorded its 25th month of consecutive expansion.
The electronics sub-index posted a drop of 0.6 point from October to 49.9, which indicates contraction. Despite the contraction, the electronics employment index recorded its 25th month of consecutive expansion.PHOTO: REUTERS

Overall PMI down 0.4 point; electronics sees first contraction after 27 months of expansion

Manufacturing growth slowed for a third consecutive month in November to record its lowest reading since July last year.

The key electronics sector marked its first contraction as well after 27 consecutive months of growth, said the Singapore Institute of Purchasing and Materials Management (SIPMM) yesterday.

The overall Purchasing Managers' Index (PMI) dipped 0.4 point from October to 51.5. A reading above 50 indicates growth.

This was in line with economist expectations, according to an earlier Bloomberg consensus forecast.

CMC market analyst Margaret Yang said the slower pace of expansion is in line with a trend that started earlier this year, when growth peaked and moved towards a cyclical downturn led by the electronics sector.

"The main reason is that globally, semiconductors and chipmakers are facing headwinds of an oversupply," she told The Straits Times, adding that the market glut will take time to ease.

Singapore's third-quarter gross domestic product grew at a slower pace as well, coming in at 2.2 per cent compared with the same period last year, and well under the 4.1 per cent year-on-year expansion in the second quarter.

  • 2.2%

    Year-on-year growth in Singapore's gross domestic product in the third quarter, slowing from the 4.1 per cent expansion in the second quarter.

Ms Yang said that although the weekend G-20 meeting between US President Donald Trump and Chinese President Xi Jinping set the stage for a new round of negotiations, "clear divergences between the US and China still exist".

This means trade friction will likely persist and "the real impact from trade tariffs will emerge from next year", she added.

Fourth-quarter trade and business activity remain good as companies try to build inventories ahead of further tariffs kicking in, but this is likely to fade next year.

The lower PMI reading last month was due to slower growth in new orders, new exports, factory output, inventory and employment levels, said SIPMM, which publishes the index based on a survey of over 150 industrial companies.

Despite slower growth, the employment index recorded its 15th month of consecutive expansion.

The electronics sub-index posted a drop of 0.6 point from October to 49.9, which indicates contraction.

This was blamed on slower expansion in the key indicators of new orders, new exports, factory output and inventory.

Despite the contraction, the electronics employment index recorded its 25th month of consecutive expansion.

A version of this article appeared in the print edition of The Straits Times on December 04, 2018, with the headline 'S'pore factory growth slows for third month'. Print Edition | Subscribe