Singapore manufacturing could be ‘nearing the peak': DBS

Manufacturing PMI eased 0.1 points to 51.1.

For the month of April, Singapore manufacturing showed declines in its purchasing managers' indices (PMI), with overall PMI easing 0.1 point to 51.1 and electronics PMI dipping to 51.6 from 51.8.

This points out that the industry is showing tentative signs of peaking, DBS Group Research noted.

While the said declines were marginal, DBS Group Research said the sub-indices may be suggesting that manufacturing activities could be nearing the peak.

The indices for new exports and new orders have moderated, pointing to some degree of softening in demand. Likewise, inventory stock levels and import indices also reflected slower activities from the supply side.

"Nonetheless, overall manufacturing and the electronics PMIs have been in expansion mode for the past 8-9 months. It has been a fantastic run for the manufacturing sector but at some point in time, the growth rate would naturally start to taper off," DBS said.

DBS Group Research noted that the strong performance of the sector has been largely driven by consumer demand.

"To sustain the current pace of expansion, much will really depend on companies increasing their capital expenditure in the coming months. That is, capital investment growth in key markets, such as the US, China, and to a lesser extent, the Eurozone, would have to increase in order to provide further impetus to manufacturing activities," it explained.