Singapore PMI may have slipped to 48.7 in September

We expect Singapore’s September Purchasing Managers Index to dip further to 48.7, from August’s 49.4. We see the electronics sector index deteriorating further to 47.6 from 48.0. Confidence is being further dented by the global economic environment, which should be reflected in these leading indicators. Although PMI data has not been consistent with Singapore‟s manufacturing performance in recent months, this divergence is largely led by the volatile bio-tech and pharmaceutical sector. While this sector could provide some upside surprise to Q3 GDP growth, the underlying trend for manufacturing remains cautious.

Meanwhile, electronics production is still contracting, and growth in precision and transport engineering production is decelerating significantly. The recent weakness of the Singapore dollar could provide some relief to exporters, but we see weak demand, especially from the West, as the overriding factor in determining output trends.