Singapore tech sector's 47-month low PMI is just tip of the iceberg

Matters are worse than expected.

After a modest rebound in Nov 12 (+0.5 pt mom to 48.8), weaker manufacturing orders and output pulled Dec’s PMI down to 48.6 (-0.2 pt mom), the sixth consecutive month of sub-50 readings. For the same reasons, Dec’s Tech PMI dipped another 0.8 pt, the fourth monthly decline, to 46.6, its lowest in nearly four years.

Here's more from CIMB:

There's more bad news for Singapore’s tech sector. The ongoing shift in consumer preference from desktop PCs to mobile devices such as tablets and smartphones made itself felt further in continued weak export demand for PCs and related parts and components − the backbone of Singapore’s tech industry.

Singapore’s Tech PMI had shed 3.8 pts in 2H12 vs. a gain of +0.7 pt in 1H12. Dec’s Tech PMI retreated yet another 0.8 pt to 46.6 (consensus and CIMB forecasts: +0.3 pt to 47.7), its lowest reading in 47 months.

There were further falls in tech’s new export orders, output, stocks, and imports last month. New export orders fell 9.1 pts in 4Q12 after gaining 3.3 pts in 3Q12.

Thankfully, local orders recovered to lift overall new orders for the second consecutive month, by +0.3 pt to a 3-month high 45.1 while backlog orders gained 1.4 pts to match their previous high of 48.0 in Oct 12. While the gain in local orders is encouraging, it is a recovery in overseas orders that can sustain improvements in the Tech PMI.