Singapore PMI predicted to rebound in September

Thanks to stronger orders and output.

According to CIMb, due partly to a holiday-shortened month, PMI was expected to dip slightly in Aug. However, the 1.3-pt mom dip to 50.5 was larger than expected.

Here's more from CIMB:

The better news is that stronger orders point to a rebound in Sep’s PMI, so is a better-than expected tech PMI reading. On the back of stronger orders and output, Aug’s tech PMI added 1 pt to 51.3 (-0.2 pt in Jul), its best reading in three months. While the tech picture is encouraging, overall manufacturing is still mixed.

Fewer working days in Aug
Due to a combination of Hari Raya Aidilfitri, the Muslim New Year, and Singapore’s National Day, we had expected Aug’s PMI to dip to 51.5 from Jul’s 51.8 (consensus: 51.9).

The actual reading of 50.5 reflected larger declines for orders (-0.8 pt mom) and production (-1.4 pts). The silver lining was, new export orders added 0.6 pt to 53.4, their strongest reading since Apr 11’s 54.1.

Another positive: backlog orders rose to a 4-month high of 50.6 (+0.4 pt). Aug’s orders-to-finished-goods ratio of 1.07x (1.02x in Jan-Jul 13), the strongest in three years, presages improvements in output in the coming months.

Clear tech recovery
Despite fewer working days, we had expected Aug’s tech PMI to rebound on stronger export orders for the seasonally stronger part of the year.

While the actual reading of 51.3 was ahead of consensus, it was slightly less than our estimate (consensus: 50.5, CIMB: 51.5).

Stronger orders (+1.9 pts mom), new  export orders (+2.7 pts), backlog orders (+0.5 pt) and output (+2.3 pts) offset softer employment (-0.4 pt), stocks of finished goods (-0.5 pt), and imports (-0.5 pt).

Together with a firm orders-to-finished-tech-goods ratio of 1.13x  (1.08x in Jan-Jul 13), visibility of a tech recovery has improved markedly.