Economists unimpressed with May PMI uptick

It finally expanded after 5 months of decline.

Singapore’s manufacturing purchasing managers’ index (PMI) finally bounced back into expansionary territory in May, following five consecutive months of decline.

The manufacturing PMI improved 0.8 points to 50.2 in May, marking the biggest increase since September 2014.

However, analysts remain unimpressed with the manufacturing sector’s prospects despite the uptick.

OCBC noted that although the new export orders gauge rose 0.7 points in May, it remained in contraction territory at 49.7. The biggest spike in the sub-indices was also in the production index, which could be due to manufacturers front-loading production in anticipation of stronger external demand in 2H15.

OCBC added that while the electronics PMI also improved, it still contracted for the second straight month at 49.8, suggesting that the important electronics industry is not totally out of the woods yet.

“We remain reluctant to tweak our 2Q GDP growth forecast where we have pencilled in quarter-on-quarter contraction, mainly due to the disappointing April industrial production (IP) data and barring significant upside surprises for May-June IP,” said OCBC.