A GAUGE of manufacturing activity in Singapore slipped for the fourth straight month in December last year, pointing to a more sluggish few months ahead for the sector amid trade war uncertainties and the peaking of electronics cycles.
The Singapore Purchasing Managers' Index (PMI) dipped by 0.4 point from the previous month to record a slower expansion of 51.1, clocking its lowest reading since July 2017. A reading above the 50-point threshold indicates that the sector is generally expanding.
The lower print in December came on the back of slower expansion in the key indicators of new orders and new exports, factory output, inventory, as well as employment level.
Easing growth was also seen in the indexes of finished goods, imports, input prices and supplier deliveries, while the order backlog index continued to contract for the third month.
The electronics sector PMI, a subset of the main index, extended its decline with a marginal dip of 0.1 point to 49.8 – its lowest print since July 2016 and the second consecutive month of contraction.
This was attributed to a first-ever decline in factory output, while the electronics imports index posted its first contraction after recording continuous expansion since April 2016.
Slower rates of expansion were seen in the key indicators of new orders, new exports, inventory and employment. Indexes of finished goods, input prices and supplier deliveries also showed easing growth.
The index of order backlog continued to contract for the eighth consecutive month.
Despite the weaker print, OCBC Bank economist Selena Ling said that Singapore's positive manufacturing PMI amid contraction in other parts of Asia suggested two points.
"First, the non-electronics industries are likely providing a buffer to the electronics weakness, and this is probably attributable to the biomedical sector," she said.
"Second, given the broad macro backdrop of tepid global growth prospects and slowing global demand for electronics, the likely trajectory is for the manufacturing PMI to continue to lose altitude in the coming months."
Across the rest of Asia, economies which saw declines in their manufacturing PMIs included South Korea, Taiwan and Malaysia.
Most notably, China's Caixin/Markit Manufacturing Purchasing Managers' Index fell to 49.7, contracting for the first time since May 2017. This dovetailed with China's official manufacturing PMI, which also fell into contractionary territory.