Manufacturing output hits five-year low in February

The electronic sector PMI also dipped to its lowest level in eight years.

Singapore’s overall Purchasing Managers’ Index (PMI) fell 1.6 points to 48.7 in February 2020, marking the lowest level since September 2015 (at 48.6) and clocking the first time that the index fell below 50.0 after expanding in the last two months. The electronic sector PMI notably fell by a greater margin to 47.6 (-2.5 points) in the same month to the lowest point since December 2012.

According to UOB, the fall in PMI readings was likely led by manufacturers’ concern surrounding the spread of the COVID-19 outbreak.

In line with global supply chain disruptions and the negative impacts to Asia’s manufacturing space, the fall in Singapore’s headline and electronic PMIs had been led by contractions in new orders, new exports, factory output, inventory and employment.

China’s factories are also “expected to take longer-than-expected to return to their capacity prior to the COVID-19 outbreak”, given expectations for work resumption rate to increase towards 90% only by end-March 2020 for medium and large enterprises, UOB noted.

UOB economist Barnabas Gan said that further decline in Singapore’s PMI readings could persist especially given the recent intensification of COVID-19 concerns, noting that China accounts for the largest share of total trade with Singapore at 13.4% in 2019.