Singapore: Manufacturing and electronics PMIs edge higher in October but outlook remains uncertain
November 5, 2019
The Singapore Institute of Purchasing and Materials Management’s (SIPMM) electronics Purchasing Managers’ Index (PMI) continued to signal a struggling electronics sector as the index remained mired in contractionary territory. The index came in at 49.3 in October, which is up slightly from 49.1 in September but below the neutral 50-threshold that separates contraction from expansion. The protracted slump in activity came on the heels of falling new orders, output and employment and a quicker build up of inventory. While October’s result suggests the downturn in the sector has bottomed out, much will depend on developments regarding the Sino-American trade war. A new round of U.S. tariffs on Chinese goods is expected to come into effect on 15 December, which would dent consumer electronics demand for mobile phones and laptops as the tariffs are aimed more at consumer goods..
Meanwhile, the manufacturing sector’s PMI inched up from 49.5 in September to 49.6 in October but remained below the 50-threshold and indicates an ongoing contraction in the sector. October is the sixth consecutive month of a reading below 50 and comes amid lingering uncertainty over the global trade environment with the protracted U.S.-China trade spat clouding prospects. Manufacturers reduced their investment plans as a consequence. However, the marginal uptick in October was thanks to increased output and inventory while employment fell at a softer pace. Less positively, new orders dipped at a stronger pace in October compared to the prior month and indicate that the sector will likely remain in a tough spot in the months ahead.
Author: Jan Lammersen, Economist