Manufacturing activity in Singapore remained buoyant in November for the fifth consecutive month, albeit at a lower level than the previous month.
Data released by the Singapore Institute of Purchasing and Materials Management (SPIMM) on Dec 3 shows a 0.1 point dip in the republic’s Purchasing Manager’s Index (PMI) to 50.4.
This follows a 50.5 point expansion in October, which marked the highest level the index has been at since March 2019 when it was 50.8 points.
The PMI index is a key barometer indicating a nation’s manufacturing activity. A reading above 50 indicates an expansion in output, while that below 50 shows an industry shrinkage.
SPIMM attributes this to a lower expansion in the rates of inventory and output indexs, as well as a faster rate of contraction in the employment index.
A further dip was mitigated by the marginally higher expansion rates in the indexs of new orders and new exports, the institute adds.
SEE: Singapore's PMI contracts for the 12th straight month in June
Says Sophia Poh, vice president for industry engagement and development at SPIMM, “the latest PMI reading indicates the resilience of the overall manufacturing sector, with expansion recorded for the fifth continuous month”.
"However, factory employment remains weak and manufacturers remain concerned about the impact on global demand arising from new waves of the global pandemic that could derail the manufacturing recovery," she adds.
See also: Singapore dollar set to weaken as MAS pivot comes into focus
Meanwhile, the electronics PMI edged up by 0.1 points to 51.1 recording an expansion for the fourth consecutive month. This is also the highest reading since the metric came in at 51.4 in September 2018.
SPIMM attributes this to faster expansion rates in the indexes of new orders, new exports, factory output and employment.
Selena Ling, who heads the treasury research and strategy division of OCBC bank believes the work-from-home arrangements will likely underpin the healthy demand for electronics. She notes that the sector’s order backlog gauge remains “very strong” at 50.8.
This is up 0.6 points from the 51.0 recorded a month ago.
Still, she says, “the growth momentum [for manufacturing and electronics PMI] going forward will not be smooth sailing and the earlier bounce driven by restocking and stockpiling post-global lockdown may be fading and the recent resurgence of global Covid waves may be weighing on global demand again. "
"However, the manufacturing sector, aided by the electronics industry, is likely to remain the stalwart for the nascent recovery story going into early 2021," notes Ling.
