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S’pore PMI up slightly to 51.8 in July – Channel News Asia

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S’pore PMI up slightly to 51.8 in July – Channel News Asia
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S'pore PMI up slightly to 51.8 in JulySINGAPORE: Singapore’s Purchasing Managers’ Index (PMI) expanded for the fifth straight month in July, a further sign that the manufacturing sector is finally on the upswing. However, economists warn that last month’s electronics PMI reading smack of some underlying concerns.

The increase may be slight, just 0.1 point higher than June — the PMI reading in June was 51.7 — but it is an expansion nonetheless.

Singapore’s manufacturing economy saw its PMI come in at 51.8 in July, beating economists expectations of a 51.3 reading. A reading above 50 indicates expansion in the manufacturing economy.

According to data released by the Singapore Institute of Purchasing and Materials Management, the slight improvement in numbers was boosted by an expansion in new orders and new export orders.

Meanwhile, the electronics sector expanded for the 6th straight month in July, with a reading of 50.3. However, the key electronics sector grew at a slower pace last month, 0.9 point lower from the previous month.

Selena Ling, head of treasury research & strategy at OCBC Bank, said: “If you look at the recent business survey for manufacturers, I think only a net weighted eight per cent of manufacturers are more upbeat about the next six months outlook. Its not driven by semi-con, electronics or biomed sectors per se, but more from the general manufacturing industry, like your F&B and tobacco type of industries.

“So if the two key drivers — semiconductors are not going gangbusters, and the biomed and pharmaceutical outlook are fairly stable — then really you’re not expecting a strong convincing rebound story for the second half of this year.”

Regionally, the PMI numbers are also not encouraging. The HSBC Purchasing Managers’ Index showed contractions worsened in key exporters such as South Korea and Taiwan, while ongoing expansions in India and Indonesia weakened.

The HSBC PMI for Korea was at a seasonally adjusted 47.2 in July, deteriorating from 49.4 in June due to weak new export orders. Taiwan’s came in at 48.6 from 49.5. India’s manufacturing PMI came dropped to 50.1 from 50.3 in the previous month.

Meanwhile China’s PMI for July showed mixed cues. China’s official PMI index rose to 50.3 in July from 50.1 in June. But the HSBC index, which covers a wider range of smaller export-oriented companies, came in at 47.7 — an 11-month low — down from June’s 48.2.

Experts said this would undoubtedly impact Singapore’s open economy.

Leif Eskesen, chief economist for ASEAN and India at HSBC, said: “We’re going in for a quite soft third quarter of the year because the slowdown in China in that sense is still unfolding. We don’t expect much of a pick up or recovery on that front until maybe closer to the end of the year to next year.

“That’s also a story that would play out for much of the region. In the US, I don’t think we should expect much of a recovery in the second half either, a little bit relative to the weak growth numbers that we saw in the first half of 2013, so overall the growth trajectory for the export oriented sector will be quite subdued for the second half.

“We are expecting a recovery in the second half but we’re not expecting a dramatic recovery in growth in Singapore so for the year as a whole, we’re looking at 2.3% growth for 2013.”

Sluggish growth aside, economists said domestically oriented and tourist-related sectors are expected to fare better in the second half of 2013.

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