Could a silver lining really be found in Singapore’s gloomy PMI?

A sliver of hope remains, say analysts.

The city-state’s manufacturing is undeniably down in the dumps according to every metric, the latest of which is the November PMI, which remained in the red with the overall manufacturing and electronics PMIs reporting readings of 49.2 and 49.0 respectively.

However, analysts from DBS aren’t losing hope just yet, as silver linings might be found in the otherwise dreary outlook.

For one, DBS says this is the second consecutive month of improvement from the bottom registered in September.

“Though it may be premature to call this a trend, at least the numbers are heading higher. Moreover, the sub-indexes are supporting that hypothesis too. Indexes for new orders, production, inventory and employment are all hinting of manufacturers’ anticipation for stronger orders,” DBS said.

Additionally, DBS says while stocks of finished goods have remained above 50, they are however, easing.

“This suggests a minor destocking in process, which may prompt an upward adjustment in production in the subsequent 1-2 months,” DBS says.

On the other hand, DBS warns that this optimism must be taken with a grain of salt, as the PMI is not seasonally adjusted.

“That is, such improvement could merely be due to seasonal factors. Beyond the year end festive season effect, manufacturers could well be front-loading production ahead of Chinese New Year lull period in early February. So, fingers crossed that this truly marks a trend and that the worst is behind,” DBS added.