Singapore: Prospects for the manufacturing sector remain weak — UOB

Alvin Liew, Chief Economist at UOB Group, looks at the latest PMI figures from Singapore.

Main conclusions

“While we were pleasantly surprised by the January rebound, the Singapore Manufacturing Purchasing Managers’ Index (PMI) remained in contraction territory, albeit slightly up 0.1 points to 49.8 in January (from 49.7 in December ), the fifth consecutive month of contraction in global activity in the manufacturing sector”.

“Similarly, the electronics sector PMI remained in contractionary territory but enjoyed a slightly better rebound of 0.2 points to 49.1 in January from 48.9 in December, nonetheless the sixth consecutive contraction since August 2022. The reason for the improvement was attributed to a slower contraction of most sub-indices within both January PMIs, but what is important is that these sub-indices were still in contractionary territory (i.e., by under 50).”

“prospects of the PMIs ofManufacture – The small rebound in January’s headline and electronics PMIs surprised us, but does not change our negative view for manufacturing in 2023. Despite January’s improvement, most PMI survey sub-indexes remained in the territory of contraction and we have also maintained our view of weaker external demand and the electronics down cycle, which are often a bad mix for trade-dependent economies with a significant share of electronics-related manufacturing, such as Singapore, Korea South and Taiwan. We expect Singapore’s PMIs to remain in contractionary territory in the first three months of 2023 and for the weakness to continue for at least another quarter (or even two).”