Manufacturing PMI retreats in June, enters 12th straight month of contraction

Demand-supply fundamentals remain tepid.

Singapore’s latest purchasing managers’ index (PMI) reading dashed hopes of a recovery in the struggling manufacturing sector.

Both the manufacturing and electronics PMIs retreated to 49.6 and 49.0 in June, marking the 12th consecutive month that the index is in contraction mode.

New orders, new export orders, production and orders backlog indices continued to retract in June, while inventory and supplier deliveries both rose.

According to OCBC, this trend suggests that supply fundamentals remain unfavourable while stock accumulations by manufacturers are rising.

“There is no light at the end of the S’pore manufacturing tunnel in 2H16, unlike the tentative green shoots seen in the other global/regional key manufacturing PMIs,” OCBC said in a report.

The report added that domestic business confidence is likely to remain subdued in the near-term, especially in the wake of the Brexit-induced uncertainties.

“IT remains unclear if the domestic manufacturing and electronics will resurface above the 50 handle anytime soon, notwithstanding the slight improvements elsewhere,” OCBC noted.