SINGAPORE (ICIS)--Singapore’s manufacturing sector will likely continue to perform better in line with an improving global economic outlook after the latest manufacturing purchasing managers’ index (PMI) data showed a seventh straight month of expansion in March.
The country’s PMI, an early indicator of manufacturing activity, rose to 51.2 in March from 50.9 in February, the Singapore Institute of Purchasing & Materials Management (SIPMM) said late on Monday. A reading above 50 denotes expansion.
The faster rate of expansion was attributed to higher new orders and new exports, higher factory output, as well as higher inventory and employment, it said in a statement.
All sub-indices showing faster expansion except for slower expansion recorded in finished goods and order backlog, according to the SIPMM.
“The latest readings of the PMI indicated that the local manufacturing sector has managed to sustain gradual growth despite uncertainties in the global environment,” it said.
Singapore’s overall manufacturing output rose by 12.6% in February, the Singapore Economic Development Board said in an earlier release. The chemicals cluster output rose by 1.9% year on year in February, it said.
The upticks seen in the manufacturing conditions can be attributed to global demand, according to Singapore-based DBS Group Research in a note on Tuesday.
“[A] similar trend is also being observed in some of the key markets such as China, US and Eurozone, which bode well for the outlook of the sector in the near term,” it said.
The series of March PMI releases in Asia on Monday showed that most markets are experiencing a cyclical improvement in demand; with many of them having China as their largest exporting partner, noted Singapore-based UOB Global Economics & Markets Research.
China’s official manufacturing purchasing managers’ index (PMI) has stayed in expansionary territory in the first quarter of this year, with the index rising further to 51.8 in March from 51.6 in February, supported by growth in new orders and new export orders.
Moreover, the modest easing seen in February is mainly due to the Lunar New Year holidays and industry specific cycles, DBS said.
“The bounce-back in March shouldn’t come as a surprise at all. Going forward, expect the PMIs to remain biased on the upside as global outlook is expected to continue to improve,” it added.
Separately, another private manufacturing PMI survey by Japanese media group Nikkei and IHS Markit, a financial information services provider, showed that Singapore’s manufacturing conditions showed improvement in March in line with other economies in the region.
The Nikkei Asean manufacturing PMI rose to 50.9 in March, up from 50.3 in February, marking the second straight month of expansion.
All Asean economies except Malaysia recorded growth across their manufacturing sectors in March, supported by stronger domestic demand as foreign demand remained weak.
“March survey data showed that the ASEAN manufacturing economy ended the first quarter in expansionary territory, which was a marked improvement since the previous quarter,” said Bernard Aw, an economist at IHS Markit, which compiles the survey.
However, the region continued to face challenges, such as the sharp increase in production costs, Aw said.
“A lack of capacity pressure among ASEAN manufacturers remained evident, as lower backlogs have now been reported for nearly three years,” he said. “Finally, national PMI data showed that the degree of business confidence across the region remained varied.”
Top Image: Construction work going on in Singapore (Photographer: View Pictures/REX/Shutterstock)
Focus article by Nurluqman Suratman