Manufacturing sector breaks hearts big time with a tiny dip to 50.8 in May

All sub-indices also dropped.

Analysts have expected the blow from Singapore's PMI in May, but were still hurt when data finally came out and confirmed their predictions.

According to DBS, true enough, PMI disappointed in May. This did not come as a surprise although market was originally looking for a marginal improvement.

Here's more from DBS:

The headline manufacturing PMI moderated by 0.3pt to register 50.8 in the month. While the manufacturing sector is expected to remain in expansion mode (above 50), almost all the sub-indexes have declined, suggesting a gradual easing towards the 50 mark.

This is consistent with our long held view that barring any significant downside risk in the global economy, the PMI figures will likely ease but remain above 50 due to a benign growth outlook in the external environment.

Manufacturers are essentially recalibrating their expectation as well as their production cycle in anticipation of marginally slower pace of improvement in demand.

The electronics PMI recorded 50.4, unchanged from the previous month. Essentially, the structural drop in electronics IP in April due to the shutting down of one of the key semiconductor plants probably has already been reflected in the sharper decline in electronics PMI between March to April.

Although there have been modest upticks in the new electronics export order and production indexes, it remains to be seen whether this will eventually result in stronger electronics production output. We have our doubt on this as the latest SEMI book-to-bill ratio has dipped to 1.03 in April, from 1.06 previously.