Singapore March manufacturing improves; external headwinds persist

SINGAPORE (ICIS)–Manufacturing activity in Singapore improved in March, boosted by higher export orders, but may remain weighed down in the near term by global economic weakness.

The country’s purchasing managers’ index (PMI) inched up to 50.7 in March, marking the seventh straight month of expansion, according to data from the Singapore Institute of Purchasing and Materials Management (SIPMM).

A PMI reading above 50 indicates expansion in the manufacturing economy, while a lower number denotes contraction.

Among sub-indices, new export orders rose to 51.4 in March from 51.3 in February, while output increased to 50.7 from 50.4 a month earlier.

Supplier deliveries’ sub-index was the only one that continued to shrink in March, with a reading of 49.9 in March from 49.7 in February.

Singapore is a major manufacturer and exporter of petrochemicals in southeast Asia. Its petrochemicals hub Jurong Island houses more than 100 global chemical firms, including energy majos ExxonMobil and Shell.

Conditions were “possibly exacerbated by the disruptions in the Red Sea owing to geopolitical conflicts but the extent of contraction has been narrowing gradually”, UOB Global Economics & Markets Research said in a note on Wednesday.

In a separate survey of private manufacturers, Singapore’s March PMI eased to 55.7 from 56.8 in February, according to financial information and services provider S&P Global.

Despite slowing from February, the rate of expansion remained strong and marked the 13th successive month in which business conditions improved in Singapore’s manufacturing private sector.

New orders for Singaporean goods and services increased for the 15th straight month and at the fastest pace since May 2023, S&P Global said.

“This led to private sector output expanding at the joint-fastest pace since October 2022. Companies in the wholesale & retail sector reported the fastest increases in both new orders and output among the monitored segments,” it said.

MANUFACTURING RECOVERY TO BE UNEVEN
While year-over-year comparisons may show gains due to the downturn in 2023, manufacturing momentum in the first half of 2024 could remain weak, UOB said.

High global interest rates will continue to hamper external demand, with overall sentiment weighed down by property sector woes in China, the world’s second-largest economy.

Supply chains may continue to face temporary disruptions due to geopolitical tensions in eastern Europe and the Middle East.

A broader manufacturing recovery in Singapore, however, is possible in the second half of 2024 as central banks start easing monetary policy, fostering a rebound in investments and export demand.

Focus article by Nurluqman Suratman

Thumbnail image: A view of Brani terminal port in Singapore, 22 November 2023. (HOW HWEE YOUNG/EPA-EFE/Shutterstock)