Singapore: The manufacturing sector loses momentum – UOB

Senior Economist at UOB Group Alvin Liew reviews the latest results from the manufacturing sector in Singapore.

Key Takeaways

“Singapore’s manufacturing Purchasing Managers’ Index (PMI) retreated further below 50.0, to 49.7 in Oct (from 49.9 in Sep), the second consecutive month of contraction in overall activity for the manufacturing sector after having expanded for 26 straight months between Jul 2020 and Aug 2022.”

“Unsurprisingly, the electronics sector PMI slipped further into contraction territory, by another 0.3 point to 49.1, the 3rd contraction in a row after two years of continuous expansion, and the lowest reading since Jun 2020 (at 47.6), cementing the view of an electronics downcycle underway.”

“Outlook – The further dip in Oct overall and electronics PMIs into sub-50 territory and the weaker set of Sep electronics NODX & IP data, confirmed that the electronics downcycle is underway. Today’s PMI also corroborates with the Oct PMIs from economies with significant exposure to electronics manufacturing such as South Korea (48.2), Taiwan (41.5). And even as we continue to be cautiously positive on the outlook for some manufacturing sectors in Singapore (such as transport engineering, general manufacturing, and precision engineering), we see the worsening electronics performance and increasingly weaker demand from North Asian economies, especially China, are clearly weighing negatively on export momentum and manufacturing demand. The slower Sep NODX growth to the G3 economies also affirmed that global demand is heading towards a downturn on the back of more aggressive monetary policy tightening. We expect further downside to the PMIs in the last two months of 2022 and the weakness to extend at least into 1H 2023.”