Singapore's manufacturing doldrum feared to persist

Indicators have been below the crucial 50 mark for the last 6 months.

According to DBS, market is looking for the current manufacturing doldrum to persist. At least that's what consensus is expecting for today's PMI numbers.

The manufacturing leading indicators have been below the crucial 50 mark for the last 6 months,reflecting a persistent contraction in production output. 

Here's more from DBS:

Yet, the same sets of figures across some Northeast Asia economies are already showing expansion in their manufacturing sectors.

Even US PMI is above 50 while Europe's number is improving. But Singapore's PMIs remain stuck in the red.

It's all about competitiveness and in this regards, the island state has been losing its edge rapidly over the past 2 years. Its real effective exchange rate (REER), a measure of export competitiveness, has been rising significantly faster than many regional peers.

That affected export performance and consequently dampened manufacturing output. In the near term, we have to agree with the market that the manufacturing sector is certainly not of the woods.

That said, ex-biomedical industrial output and the non-oil domestic exports (NODX) appear to have bottomed (see Chart). This would probably make for a gradual improvement in the coming months. Perhaps an upside surprise for tonight's PMI should not come as a surprise too.