Don't pin too much hope on PMI data, says DBS

Global PMIs are slipping and Singapore’s unlikely to buck the trend.

PMIs for the overall manufacturing sector and the electronics industry are due tomorrow. It’s interesting to see that market remains pretty hopeful by having a flat 50.0 forecast for the overall manufacturing sector PMI and expect the electronics segment to come in a tad higher at 50.4 but DBS is not as positive.

Here’s from DBS:

Plainly, that’s optimistic in our opinion. With the PMIs for key markets such as the US, Eurozone and China slipping simultaneously, it is hard to imagine Singapore’s purchasing managers bucking the trend.

At the end of the day, the PMI is sentiment driven and largely reflects manufacturers’ expectation on Index demand going Singapore forward.
 

Given the existing doldrum in China consumer demand in Europe, receding retail sales in the US as well as slowing growth momentum in Asia, the more likely outcome for Singapore’s PMI would be a dip into the contraction level (<50).

It remains to be seen whether the final outcome will fall short of expectation but odds are certainly not in favor of an expansion or flat reading as what market is predicting.