Private sector PMI rises to 55.4 in November

The new reading is the highest since 2Q2013.

The headline Nikkei Singapore Purchasing Managers’ Index (PMI) rose from 54.2 in October to 55.4 in November.

According to IHS Markit, the latest reading was the highest seen for nearly 3.5 years, which also brought the average PMI so far in the final quarter of 2017 to the strongest seen since the second quarter of 2013.

Output increased to the greatest extent for over a year, in line with higher sales. Inflows of new business rose further and at the fastest pace in almost four years.

IHS Markit principal economist Bernard Aw commented, "The Nikkei Singapore PMI data accurately foretold of the stronger growth in the third quarter and the November reading brings the PMI average for the fourth quarter up to 54.8, which is consistent with an annual GDP growth of over 5.0%."

"This suggests that the current strong growth momentum is likely to be sustained through the three months to December," Aw added.

Here's more from IHS Markit:

A sustained and sharp increase in export sales was a key driver for overall new order wins. While lower than the record high in October, new export orders increased at the second-fastest rate in the survey history during November.

Higher output pushed firms to raise workforce numbers for a third straight month in November despite increasing staff costs. Employment growth was at the highest since January, but survey evidence suggested that the bulk of hiring was for part-time employment.

Despite additional labour, backlogs of work continued to rise, reflecting an ongoing strain on capacity. Furthermore, the rate of accumulation in additional workloads picked up to the fastest so far this year.

In line with higher sales, firms built-up inventories by increasing purchasing activity further. Greater demand for inputs placed further pressure on supply chains, with vendor performance deteriorating for a fourth successive month and at the steepest rate since June last year.

Delivery delays were commonly associated with higher costs as demand for inputs exceeded supply.

As a result, purchase cost inflation rose to the sharpest degree since February. At the same time, wage inflation remained sharp, rising to the highest for 14 months, and contributed to overall cost increases.

To protect profit margins, firms raised selling prices for a third successive month. Notably, output charges increased at a faster pace than input prices as strong client demand accorded firms with greater pricing power.

Business confidence remained upbeat, with firms generally optimistic about the outlook in the year ahead.