Singapore Oct manufacturing PMI rises to 50.2; Asia factory activity remains weak

SINGAPORE (ICIS)–Singapore’s manufacturing purchasing managers’ index (PMI) edged higher to 50.2 in October, but weak external demand will likely weigh on the sector for the rest of the year and into early 2024.

The October figure was the second straight month of expansion following September’s 50.1 reading.

A PMI reading above 50 indicates expansion in the manufacturing economy, while a lower number denotes contraction.

The new exports sub-index rose to 50.2 in October from 50.0 in September, while other key subindices saw milder improvement, with production up to 50.3 from 50.2, according to data from the Singapore Institute of Purchasing and Materials Management (SIPMM).

Several subindices remained contractionary in October, with new orders rising marginally to 49.9 from September’s 49.8 and input purchases up at 49.8 from 49.7.

The input price index for the headline PMI reading rose to 50.4 in October from 50.3 in September and is likely to remain in expansionary territory on recent strength of crude oil prices.

“While we are heartened by the broad-based improvement in October’s overall PMI, we caution that the manufacturing sector could remain downbeat in the near term given the weak external demand,” Singapore-based UOB Global Economics & Markets Research economists said in a note.

“Headwinds in the manufacturing sector could persist on tight financial conditions stemming from an elevated interest rate environment,” they said.

PRIVATE SECTOR PMI SLIPS BUT REMAINS EXPANSIONARY
Singapore’s private sector PMI, meanwhile, fell to 53.7 in October from September’s 54.2 reading, financial information services provider S&P Global said.

The October reading marked the eighth consecutive month in which Singapore’s private sector economy expanded.

However, external demand remained weak as new export orders fell at the sharpest pace since the pandemic, it said.

“Weaker conditions at key export markets and increased competition negatively affected foreign demand, according to panelists,” S&P Global said.

Singapore is a major manufacturer and exporter of petrochemicals in southeast Asia. Its petrochemicals hub Jurong Island houses over 100 global chemical firms, including energy majors ExxonMobil and Shell.

ASIA PMIs REMAIN WEAK
The mild expansion in Singapore’s PMI in October was largely in contrast to the region’s overall manufacturing conditions, with China, Japan and South Korea all reporting a slowdown in factory activity for the month.

In southeast Asia, Vietnam and Malaysia’s manufacturing PMIs in October remained in contraction at 49.6 and 46.8, respectively, due to fallout from China’s economic slowdown, according to S&P Global.

China, the world’s second-biggest economy, is a major export market for most Asian economies.

China’s official PMI slipped back into contraction territory in October, falling to 49.5 from 50.2 in September, snapping four straight months of readings above 50.

A separate survey of a wider base of manufacturers in the country by Chinese media group Caixin also showed a contractionary reading of 49.5 in October.

Focus article by Nurluqman Suratman