Soaring costs, falling demand dent corporate growth in September

Nikkei PMI ticked up but costs rose at breakneck speed.

The headline Nikkei Singapore Purchasing Managers' Index (PMI) rose to 51.4 in September, the strongest pace of growth seen since February. However, threats like rising business costs and muted client demand spoil the picture beneath the rosy headline number.

"Client demand failed to show any signs of meaningful improvement, with total new work stagnating for the second month in a row, while new export business rose only slightly," said Annabel Fiddes, Economist at Markit, which compiles the survey.

Relatively muted client demand amid a slowdown in market conditions led companies to be more cautious regarding their purchasing activity in September, with input buying falling for the first time in three months.

Stocks of purchases also fell in September, though at a marginal pace.

Singaporean private sector companies signalled a further increase in total cost burdens during September, with the rate of inflation quickening to a seven-month high.

Data indicated that a renewed rise in purchasing prices along with the fastest increase in staffing costs since last November had contributed to greater overall input prices.

"This could translate into weaker growth of output as we head into the final quarter of 2015, with slower global growth also weighing on the overall business outlook,” Fiddes said.

Following a slight decline in August, average prices charged by private sector companies in Singapore increased in September.