Singapore: Coronavirus outbreak could mitigate PMI improvement – UOB

Economist at UOB Group Barnabas Gan gives his views on the manufacturing sector in Singapore.

Key Quotes

“Singapore’s overall Purchasing Managers’ Index (PMI) showed further increase of 0.2 point to 50.3 in January, according to the Singapore Institute of Purchasing and Materials Management (SIPMM). This is the second expansion reading (PMI>50) for the overall manufacturing sector, after seven months of consecutive contraction. The electronic sector PMI also rose in tandem by 0.2 point to 50.1, clocking its first expansion reading in 15 months.”

“Singapore has shown signs of stabilisation as overall PMI readings trended higher since October 2019. The improvements seen in both overall and electronics sector PMI data suggest that manufacturers remain cautiously optimistic after the Phase One trade deal between the United States and China. Specifically, the higher PMI reading was underpinned by higher expansion readings recorded in new orders, new exports, factory output, inventory, and employment.”

“While the latest PMI reading highlights the cautious optimism of Singapore manufacturers, SIPMM indicated that it did not account for the recent Wuhan coronavirus outbreak.”

“The latest PMI data for January has painted a relatively positive environment for Singapore’s manufacturing and electronic space, exports and employment… Nonetheless, the impact from the Wuhan coronavirus is not reflected in January’s reading, and an exacerbation of the negative impact from the virus would almost certainly hurt manufacturer’s sentiment in the coming months.”