Find out why analysts are unimpressed with the uptick in Singapore’s PMI

The manufacturing outlook remains  bleak.

Singapore’s Purchasing Managers’ Index (PMI) inched up to 50.5 points in September, up 0.8 points from August’s surprising low 49.7 reading.

However, analysts caution that the uptick does not herald an uplift in the country’s manufacturing outlook.
DBS warned that the manufacturing sector will remain tepid and production output levels will remain fairly flat, given the sluggish global recovery and the overhanging restructuring drag.

“The supposedly weak August number is merely a pullback from a spike-up to 51.5 in July. That is, average out July and August numbers and we have PMI at about 50.6. And that's exactly what the September number is showing! So September's PMI should be viewed as a reversal back to trend rather than an uptick per se. Plainly, there hasn't been anything out in the horizon suggesting a strong uptrend in the manufacturing outlook,” noted a report from DBS.

However, there are already signs of the year-end festive season effect, with electronics PMI bouncing to 51.9 from 50.7 in the previous month.

“What this reflects is that electronics manufacturers are anticipating stronger orders and ramping up production ahead of the year-end festive season. But the impact seldom persists. Production activity will usually fizzle out towards the end of the year,” stated DBS.