Expect Singapore’s manufacturing PMI to underperform in 1Q15: analysts

The manufacturing sector is on a snail’s way to recovery.

Singapore’s headline PMI for January was released a few days ago, and analysts expect that the number will remain in the contraction territory not only for this month, but in 1Q15.

The manufacturing PMI contracted for the second straight month at 49.9 in Jan, albeit a 0.3 point improvement from the Dec14 reading, which was the lowest since Feb13. New orders (49.8) and inventory (49.6) remained the bugbears although new export orders (+0.3 to 50.9) and production (+0.9 to 50.4) improved, suggesting the road ahead still remains challenging to say the least.

DBS analysts say, “All sub-indices having declined in the previous month, the belief is that there has been a lack of significant improvement in global demand over the past months.”

Meanwhile, UOB think that first half growth prospects look tepid at this juncture. In fact, their forecast for manufacturing growth in 1Q15 is flat year-on-year.

Electronics PMI stayed above water at 50.5, unchanged from its Dec print, but the underlying picture was mixed.

“Expect the manufacturing PMI to be lifted marginally above the 50 level, which differentiates between expansion and contraction in production activity. Yet, if we seasonally adjust the series, manufacturing activity is probably placid and unexciting. In fact, there are more risks than upsides for the manufacturing sector in the near-term given the slowdown in key markets such as the Eurozone and China,” DBS adds.