Pessimism prevails in Singapore’s slowing manufacturing sector

August PMI will remain in the red.

An uninspiring set of manufacturing data from key markets is expected to keep Singapore’s Purchasing Managers’ Index (PMI) in the red for August.

Consensus forecasts expect Singapore’s overall manufacturing and electronics PMIs to dip to 49.4 and 49.0, compared to 49.7 and 49.5 in July.

“Judging from the recent outcome of the PMIs in key markets, such pessimism seems justified. And honestly, signs of weakness on the external front and correspondingly on the manufacturing sector have already surfaced for a while,” DBS said in a report.

According to DBS, manufacturers are becoming more pessimistic as the increase in inventory and stocks of finished goods indexes have been met by decline in all the production and new orders indexes.

“Latest China official PMI registered 49.7, down from 50.0. PMIs in other key regional economies are also falling. Moreover, the PMI is ultimately a sentiment gauge of the purchasing managers within the manufacturing sector. And sentiments do swing. In this instance, manufacturers have obviously become more bearish,” DBS said.