Sluggish global economy to drag Feb PMI further into the red

It is expected to dip by 0.2.

The Lunar New Year is expected to slow down manufacturing activities, but despite the seasonal effects the PMI trend is still not encouraging.

According to a report by DBS, the barometer for manufacturing activity is expected to dip to 49.7 in the month despite the modest improvement in January. Manufacturing PMI (Jan15) improved to 49.9 but remained in the red.

The headline manufacturing PMI contracted for the second consecutive month and February will be the third. While most sub-indexes have registered higher readings, the problem is seasonal effects.

Manufacturing activities will usually slow during the Lunar New Year month as plants in China enters a lull period. This affects Singapore’s manufacturing activity as the island state exports higher value added parts and components to the Chinese manufacturers. If seasonal effects are removed, the headline number should read continued expansion in manufacturing activity. However, the trend is not that encouraging.

Both indices have dipped recently. And that clearly reflects the underpinning sluggish growth in the global economy.