Singapore: Outlook for the manufacturing sector remains weak

UOB Group’s Senior Economist Alvin Liew reviews the latest PMI figures in Singapore.

Key Takeaways

“Even as we are pleasantly surprised by Jan’s uptick, Singapore’s manufacturing Purchasing Managers’ Index (PMI) still remained in contraction territory although it edged higher slightly by 0.1 point to 49.8 in Jan (from 49.7 in Dec), the fifth consecutive month of contraction in overall activity for the manufacturing sector.”

“Similarly, the electronics sector PMI remained in contraction territory but enjoyed a slightly better uptick of 0.2 point to 49.1 in Jan from 48.9 in Dec. This was nonetheless the 6th consecutive contraction since Aug 2022. The reason for the improvement was attributed to slower contraction for most of the sub-indices within both of the Jan PMIs, but importantly, these sub-indices still remained in contraction territory (i.e sub-50).”

“Manufacturing PMI Outlook – The small uptick in Jan overall and electronics PMIs was a surprise to us but does not change our negative view for manufacturing in 2023. Despite the Jan improvement, most of the sub-indices within the PMI surveys remained in contraction territory and we have also kept our view of weaker external demand and the electronics downcycle remaining in place, which are typically a bad combination for economies which are trade reliant with a significant share of manufacturing related to electronics, such as Singapore, South Korea and Taiwan. We expect the PMIs for Singapore to stay in contraction territory in the first three months of 2023 and the weakness may extend for at least another quarter (or even two).”

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