Singapore's 50.6 March PMI hits 22-month high

Companies are back in track post-CNY.

According to CIMB, with companies resuming business following the festive break in Feb 13, factory output, as measured by the monthly PMI, recovered 1.2 pts last month  to 50.6, its strongest monthly gain since May 11.

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Although we had highlighted the possibility of a near-term rebound, Mar’s reading exceeded expectations (CIMB and consensus: 49.8) and represented the second time in three months that manufacturing had expanded.

The stronger PMI was led by New Orders (+1.6 pts to 51.9) and Output (+2.4 pts to 50.8). Readings for eight of its 10 components were above 50. While this is encouraging, is the rebound sustainable? Backlog Orders declined another 0.4 pt (-0.2 pt in Feb) to 49.1, the lowest this year.

Felicitously, the average backlog of 49.4 in 1Q13 was higher than 4Q12’s 47.4. The 2-pt qoq rise in backlog orders in 1Q13 and higher orders-to-finished goods ratio of 1.02x (0.97x in 2H12) support improved output in 2Q13.

Another month of expansion for tech. After two strong months (+3.3 pts in Jan, +2.2 pts in Feb), tech PMI dipped 0.2 pt to 51.9 last month. Eight of its components were still above 50. New Orders declined 1.5 pts to 51.3 while Production dipped 0.7 pt to 51.7.

The stronger readings this year lifted tech PMI to an average 51.3 in 1Q13, its highest since 2Q11’s 51.8. Encouragingly, Backlog Orders rose 4.3 pts to 51.8 in 1Q13 (47.5 in 4Q12, 50.0 in 1Q12). Together with a stronger orders-to-finished tech goods ratio of 1.07x (0.94x in 2H12), we might be seeing early signs of a tech rebound.