What the latest May PMI figures have been hiding from us

Manufacturing PMI rose to 51.1.

According to DBS, industrial production for May will likely surprise on the upside. While market appears relatively indecisive with a diverse view and a median forecast of 0.1% YoY, we reckon that the final outcome could come in at 3.3% YoY. 

That follows a fairly healthy growth of 4.7% YoY in the previous month. Why that optimism despite the disappointment (-4.6% YoY, -1.1% MoM sa) in the recent May non-oil domestic exports (NODX)? Plainly, the NODX figure has been highly distorted by base, price and currency effects.

Here's more from DBS:

The latest May PMI figures are in fact showing sustained expansion in production output. We have our bet placed on the PMIs.

Key manufacturing PMI posted a higher 51.1, which was an increase of 0.8 point over the previous month while the electronics PMI continued to reflect an expansion in the industry, coming in at 51.4, up 0.2 from April.