Manufacturers in Singapore said that conditions in the sector were still improving in April, but strength of the expansion was a tad weaker when compared to a month ago.
The sector’s purchasing managers’ index (PMI) fell by 0.1 to 51.1, said the Singapore Institute of Purchasing and Materials Management (SIPMM) on Tuesday.
In particular, the electronics sector, which has been driving manufacturing growth in recent months, saw its PMI reflect a more pronounced weakness in expansion as new orders slipped.
The manufacturing PMI is a leading indicator of the sector’s performance, and is based on the responses from companies about the month-on-month changes in the sector.
A reading above 50 indicates a faster rate of expansion from the previous month, while a reading below 50 indicates worsening conditions. April’s headline PMI slightly undershot expectations. A Bloomberg poll of four economists had expected a 51.2 reading, which would have been unchanged from March.
April’s drop was due to declining growth rates in key indicators of new orders, new exports, inventory and employment. The fall in the headline PMI was cushioned by a faster growth rate in factory activity.
The electronics PMI was at 51.6, or 0.2 lower than in March.
The slower rate of expansion was attributed to slower growth rates in the new electronics orders, which fell by 0.6 to 52.5. Falls in the readings for electronics factory output, and electronics inventory level also led to the sector’s drop in PMI.
OCBC economist Selena Ling said that the slippage in PMIs should not be a cause for concern.
“Coming off from a very strong first quarter, this slippage shows that there may be some tapering off in terms of the growth momentum. But PMIs in the region are still strong, we are still fairly upbeat about semiconductor demand,” she said.
Source from The Business Times