There was no respite for Singa- pore's manufacturing sector, with May marking the 11th straight month of contraction.
The Singapore Purchasing Mana- gers' Index (PMI) released yesterday came in at 49.8, the same reading as in April. A reading below 50 indicates a contraction.
The flat reading came amid mixed trends, said the Singapore Institute of Purchasing and Materials Management, which compiles the index from a poll of more than 150 firms to generate an early indicator of manufacturing activity.
While new orders and new exports declined, factory output increased. The electronics sector posted a PMI reading of 49.1, down from 49.5 in April. The dip was attributed to fewer new orders and exports, slower factory output and declining employment.
Employment in the electronics sector contracted for the 13th straight month. OCBC economist Selena Ling said there could be excess inventory in the domestic electronics sector in the short term.
"The readings suggest that demand conditions have likely softened and electronics manufacturers have not been able to clear their stock," she said.
Ms Ling added that the Nikkei- Singapore PMI, which is due to be published today, is another key indicator. It will show if the sharp deceleration in the services sector in the first quarter has persisted, which could pose a risk to OCBC's forecast of 1.8 per cent gross domestic product growth, she said.
The gloomy PMI data is not unique to Singapore.
Mr Frederic Neumann, co-head of Asia Economics Research at HSBC, called the latest PMI figures for Asia "damp and soggy".
He noted that China, Japan and Indonesia all recorded declines.
While employment figures in some parts of Asia were encouraging, recorded job growth is not strong enough to boost domestic demand, he said, adding that China's slowing job figures also suggest further declines in consumption.
DBS economist Irvin Seah was blunt in his assessment, saying the local manufacturing economy is in recession, and that "it is hard to squeeze an optimistic story out of the current numbers".
"Given that our main export market is China, which is facing a structural and not a cyclical slowdown, it is a gloomy picture ahead."
He said PMI numbers are usually not seasonally adjusted, so the figures for the few months after Chinese New Year tend to be higher than actual manufacturing activity.
"I'm a bit worried that last month's figure has not even ventured into expansionary territory, compared with last year which recorded an expansionary reading. I think we must brace ourselves for a gloomy outlook."