Singapore factory growth cools for third consecutive month

The overall Purchasing Managers' Index dipped 0.4 points from October 2018 to 51.5.
The overall Purchasing Managers' Index dipped 0.4 points from October 2018 to 51.5.PHOTO: ST FILE

SINGAPORE - 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) on Monday (Dec 3).

The overall Purchasing Managers' Index (PMI) dipped 0.4 points 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 chip-makers 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.

 

Ms Yang added that although the weekend G20 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 said.

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 in 2019.

The lower PMI reading in November was due to slower growth in new orders, new exports, factory output, inventory, as well as 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 further drop of 0.6 points from October to 49.9, which indicates contraction.

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

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