Hopes for a broader economic turnaround dashed as PMI remains dismal

It has contracted for the 11th straight month.

Singaporeans may have to wait a little longer for a sharper economic improvement, as the May reading of the Singapore Purchasing Managers’ Index recorded no change from the previous month at 49.8, despite expectations of a rebound.

According to the Singapore Institute of Purchasing & Materials Management (SIPMM), the unchanged reading is due to new orders and new exports posting marginal declines, but offset by marginal increase in factory output.

“The production index has posted a marginal expansion reading for the first time, after 10 months of contraction,” SIPMM said.

SIPMM added that input prices for raw materials also similarly recorded 11 months of contractions, while the imports index expanded for 13 months.

Manufacturing employment, meanwhile has been anemic, with the index recording periodic contractions since November 2014, SIPMM said.

The electronics sector PMI didn’t exactly bring good cheer either, posting a drop of 0.4 from the previous month, plummeting to 49.1.

“The drop in the latest reading was attributed to lower new orders and new exports, a slower factory output, and declining employment. Electronic employment has recorded 13 months of contraction in reading, whereas electronics finished goods recorded 11 months of expansion in reading,” SIPMM said.

SIPMM explained that electronic manufacturers are not clearing their finished goods fast enough, creating stock overhang and diluting employment.