Singapore industries may weaken further amid surging COVID-19 cases

Author: Nurluqman Suratman


SINGAPORE (ICIS)--Singapore's manufacturing sector will continue to struggle amid surging COVID-19 cases and weakening external demand, with the country’s official purchasing managers’ index (PMI) recording its second consecutive month of decline in September.

Data from the Singapore Institute of Purchasing and Materials Management on Monday showed a slight dip in September manufacturing PMI to 50.8 from August.

The headline PMI figure remains above the 50.0 mark, which separates expansion from contraction in the manufacturing economy.

Singapore has fared better than its peers in southeast Asia which are also dealing with surging COVID-19 cases.

The September PMIs of Thailand, Malaysia and Vietnam were wading in contractionary territory.

"These suggest that manufacturing momentum in Asia has largely decelerated further as the region’s export growth slowed," Singapore-based UOB Global Economics & Research said in a note on Tuesday.

The decline in Singapore's overall manufacturing PMI in September follows the slower expansion rates in new orders, new exports and factory output.

Non-oil domestic exports (NODX) in September grew at its slowest year-on-year rate since November 2020 at 2.7%, with a marked slowdown in petrochemical shipments abroad from the previous month.

Uncertainties surrounding COVID-19 remain tangible to-date, given the spike in community-linked cases both in Singapore and in its key trading partners, UOB said.

Daily new locally-transmitted infections have accelerated exponentially in recent weeks to above 2,000 cases, prompting the government to introduce in late September social restrictions to limit further infection.

There were 2,475 new COVID-19 cases in Singapore on 4 October, health ministry data showed.

Manpower issues have prompted Anglo-Dutch energy major Shell to suspend a planned turnaround at its Singapore cracker, following tighter restrictions from late September, according to market sources.

The plant was initially slated to shut for around a week in the first half of October. Shell has yet to reply to ICIS’ queries on the issue.

"The prognosis remains optimistic however, given that past restriction measures had been effective in bringing down infection, which in turn should provide the necessary backdrop for a ‘COVID-resilient’ environment in the foreseeable future," UOB said.

Singapore's PMI has been in the expansionary zone for 15 straight months and will still remain "one of the key economic pillars" for the country's economy, UOB said.

A separate private sector survey of Singapore manufacturers showed a more upbeat PMI reading. Financial information services provider IHS Markit’s September PMI for Singapore rose to 53.8, up from 52.1 in August.

Easing of COVID-19 restrictions in August helped buoy up business activity into September, with new orders posting faster growth, it said in a statement on Tuesday.

"Despite the increase in overall demand, uncertainty with regards to the COVID-19 virus held private sector firms back in their stockpiling efforts," it said.

Suppliers’ delivery times continued to lengthen and to the greatest extent since July 2020 amid ongoing COVID-19 disruptions to shipping.

"Overall business confidence nevertheless improved in September. Firms expressed optimism that the shift to a COVID-19 endemic situation can enable further growth of demand and business activity in the Singapore private sector," IHS Markit said.

Focus article by Nurluqman Suratman

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