Singapore manufacturing headwinds set to continue after May contraction

Nurluqman Suratman

04-Jun-2020

SINGAPORE (ICIS)–Singapore’s manufacturing sector will likely remain in the doldrums for the rest of the year following another month of contraction in May as the coronavirus pandemic wears on the economy.

The city-state’s manufacturing purchasing manager’ index (PMI) for May rose by 2.1 points from the previous month to 46.8, according to data from the Singapore Institute of Purchasing & Materials Management (SIPMM).

“Going forward, manufacturers are cautiously optimistic of a gradual recovery towards the latter half of the year,” said Sophia Poh, vice president of industry engagement and development at SIPMM.

The May reading marks the fourth straight month of contraction for Singapore’s overall manufacturing sector, it said.

Slower contractions in May were recorded in the key indexes of new orders, new exports, factory output and employment, SIPMM said.

The overall employment index for the manufacturing sector has now posted contractions for four straight months.

In a separate survey of manufacturers by private data firm IHS Markit, Singapore’s PMI fell to a new low of 27.1 in May, down from 28.1 in the previous month.

“Latest PMI data makes for another grim assessment of Singapore’s economy as containment measures to stem the spread of COVID-19 [coronavirus disease 2019] continued throughout May,” IHS Markit economist Joe Hayes said.

“With the stringency of the circuit breaker set to be partially eased from June, we can expect to see a gradual improvement as certain sectors return to work, although it is clear that the economic damage caused thus far is going to take a considerable amount of time to heal,” he said.

Singapore on 1 June ended its soft lockdown called the “circuit breaker” put in place to curb the spread of the coronavirus. Businesses allowed to resume operations from 2 June include manufacturing firms. Petrochemical plants were excluded from the circuit breaker phase.

Initial data underscore further headwinds in Singapore’s manufacturing environment, said Barnabas Gan, an economist at Singapore-based UOB Global Economics & Markets Research.

“Beyond the pandemic, we would also need to account for the renewed US-China trade tensions that may intensify in the months ahead,” he said.

An escalation in the trade conflict might case a broad-based slowdown in global trade flows which will weigh on Singapore’s export-reliant economy.

Pharmaceutical production and exports may continue to support Singapore’s overall manufacturing and trade environment, UOB’s Gan said.

However, pharmaceutical exports only account for 9.9% of NODX in 2019, while the biomedical manufacturing cluster is weighted at just under 20% of total industrial production, according to Gan.

Focus article and interactive by Nurluqman Suratman

Visit the ICIS construction topic page for analysis of the impact on chemical markets and links to latest news

READ MORE

Global News + ICIS Chemical Business (ICB)

See the full picture, with unlimited access to ICIS chemicals news across all markets and regions, plus ICB, the industry-leading magazine for the chemicals industry.

Contact us

Now, more than ever, dynamic insights are key to navigating complex, volatile commodity markets. Access to expert insights on the latest industry developments and tracking market changes are vital in making sustainable business decisions.

Want to learn about how we can work together to bring you actionable insight and support your business decisions?

Need Help?

Need Help?