Singapore’s manufacturing sector continued its growth streak for the fifth consecutive month, reaching its highest level in just over two years, according to the latest data from the Singapore Institute of Purchasing and Materials Management (SIPMM).
The purchasing managers index (PMI) compiled by SIPMM edged up to 50.7 in January from 50.5 in December, marking its strongest reading since December 2021.
“The new year augurs well for the manufacturing sector,” said Stephen Poh, executive director at SIPMM, on Friday. Despite facing challenges from global supply chain disruptions and geopolitical headwinds, manufacturers in Singapore remain “cautiously optimistic” about the year ahead, Poh noted in a release.
The latest data adds to the positive signals about the manufacturing recovery in Southeast Asia. Earlier this week, several PMI readings indicated broad optimism among manufacturers about the sector’s outlook for 2024. However, concerns remain regarding price pressures and weak demand.
SIPMM highlighted that the upbeat January PMI was driven by faster growth in key indexes such as new orders, new exports, and input purchases. However, a slowdown in factory output and employment weighed on the overall index, while the index for supplier deliveries remained in contraction.
In the electronics sector, which accounts for about a third of Singapore’s manufacturing activity, the PMI rose to 50.6 in January from 50.2 in December. SIPMM attributed this increase to a pickup in new electronics orders and exports.
The strength in the manufacturing sector is seen as a positive sign for the broader economy. UOB economists Alvin Liew and Jester Koh noted that Singapore’s GDP growth in 2023 was affected by sustained weakness in manufacturing, which contracted by -3.6%. However, they believe that activity in externally oriented sectors like manufacturing has likely reached a trough and should improve in the coming quarters.
Looking ahead, attention will focus on next week’s data releases, including S&P Global’s PMI and retail sales figures. UOB economists anticipate continued interest in news related to Singapore’s upcoming budget, scheduled for February 16.
(Source: Morning Star | MarketWatch)
