PMI deteriorates further to 27.1 in May: IHS Markit

Despite deflationary pressures, purchasing power remained weak during the month.

Singapore’s purchasing managers’ index (PMI) fell to 27.1 in May from 28.1 in April, according to data from IHS Markit. This signals further deterioration in the country’s private sector amidst COVID-19.

In addition, the headline figure reached a new survey low, indicating stronger decay in economic health against that seen in April. Latest survey data pointed to another considerable drop in business activity during May, which is a similar pace of decline to April's survey record as extended business shutdowns, reduced staff availability and a complete collapse in sales severely impeded business operations, IHS Markit stated.

“May's survey pointed to a further decrease in new business which was once again unprecedented in scale, with approximately 90% of companies registering lower intakes of new work. Measures to stem the spread of COVID-19 were reportedly the key factor pulling demand lower. Sales to overseas markets also sank during May, which firms attributed to weak global economic conditions,” the report added.

The collapse in new job opportunities since March has also contributed to a sharp rise in excess capacity at businesses across Singapore, leading to further declines in purchasing activity and employment. Input buying fell drastically and at a survey-record pace amidst lower business requirements.

However, the report noted that cost pressures eased substantially during May as a result of government subsidies and businesses' efforts to reduce expenses. Prices charged for goods and services dipped as firms attempt to attract sales.

“In both cases, however, rates of deflation eased from April. Looking ahead, business sentiment slumped to a new survey low and indicated a substantial degree of pessimism towards activity levels over the coming 12 months,” IHS Markit stated.