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Singapore’s factory activity shrinks for fifth straight month

SINGAPORE — Manufacturing activity in Singapore continued to weaken, shrinking for the fifth straight month in April, with the key electronics sector falling back into contractionary mode after expanding the month earlier.

SINGAPORE — Manufacturing activity in Singapore continued to weaken, shrinking for the fifth straight month in April, with the key electronics sector falling back into contractionary mode after expanding the month earlier.

The Purchasing Managers’ Index (PMI) dipped 0.2 of a point to 49.4 points last month from 49.6 points in March, staying below the 50-point mark that separates contraction from expansion, as new orders and new export orders continued to decline, the Singapore Institute of Purchasing & Materials Management said yesterday.

“The lower new orders and export orders for Singapore’s manufacturing sector is a similar reflection of the PMI performance from our neighbours. The broad picture is weak, with China, India and Taiwan on weak numbers,” said Mr Michael Wan, economist at Credit Suisse.

PMI figures in the region showed China, Taiwan and South Korea in contractionary mode and India expanding at a slower pace than the previous month. Manufacturing activity in China, the world’s factory floor, slumped to its lowest in a year last month, weighed down by a decline in new orders. The closely watched HSBC China PMI reading fell steeply to 48.9, the lowest level since April 2014, from 49.6 in March.

“Singapore’s manufacturing sector continues to be affected by ongoing restructuring by the government, which is also a factor that contributes to the weak figures,” Mr Wan added.

Ms Selena Ling, head of Treasury Research & Strategy at OCBC Bank, said: “Singapore’s manufacturing sentiment remains very mixed for now, suggesting a convincing recovery is not on the horizon yet.

“While we do not expect the domestic manufacturing sector to repeat its dismal first quarter performance when it contracted 3.4 per cent year-on-year, the momentum improvement in the second quarter of this year is unlikely to herald a strong recovery,” she added.

The PMI for the electronics sector, which contributes to about one-third of industrial production, contracted one point to 49.1 points last month after expanding the month earlier, undermined by the declines in new orders and new export orders.

The reading comes after the Monetary Authority of Singapore said last month in its macroeconomic review that “the domestic electronics industry continues to be weighed down by the ongoing restructuring towards higher-value manufacturing and services”.

“We are still stuck in this one-step forward, one-step back pattern … While semiconductors, data storage and other computer modules may be benefiting from some demand pick-up, others like computer peripherals, infocomms and consumer electronics could still lag,” said Ms Ling.

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