Singapore’s factory activity contracts for second straight month in June

June PMI at 49.6, it's at lowest since Aug 2016; new orders, factory output, inventory, employment all retreated.

Activity in Singapore’s factories contracted for the second month in a row in June amid global trade uncertainties, after 32 months of consecutive expansion.

Purchasing Managers’ Index (PMI) – which measures manufacturing activity and sentiment – declined 0.3 point from the previous month to 49.6 June, the Singapore Institute of Purchasing and Materials Management (SIPMM) said on Wednesday (Jul 3).

A PMI reading above 50 indicates expansion, while one below the benchmark line points to contraction.

The weaker performance was attributed to first-time contractions in the key indicators of new orders, factory output, inventory and employment level, SIPMM said.

The electronics sector declined 0.2 point from the previous month to 49.2, recording eight months of consecutive contraction.

This was due to further contractions in the key indicators, SIPMM said in its report.

“While the soft global electronics demand theme has been apparent for many months, the broad-based weakness as reflected in the sudden first-time contractions seen in many of the sub-gauges within the manufacturing PMI suggest that the other non-electronics manufacturing industries may also be feeling the heat from the US-China trade tensions and business confidence is gradually being eroded,” said Ms Selena Ling, head of treasury research and strategy at OCBC Bank.

June’s bleak factory activity is in line with similar sluggish sentiment globally.

Factory activity in the eurozone shrank faster last month than previously thought, and US manufacturing activity slowed to a near three-year low in June, Reuters reported.

“Global manufacturing PMI took the wind from the sails of risk assets outside of those which are stock related as it becomes apparent this is a real and genuine slowdown the world is experiencing,” Greg McKenna, strategist at McKenna Macro, said in a note to clients.

Source: Channel News Asia

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SIPMM - Singapore Institute of Purchasing and Materials Management

The Singapore Institute of Purchasing and Materials Management is the nation’s professional body for the LPS sector – the sector which includes professionals in Logistics, Procurement and Supply Chain. Since its founding in 1972, SIPMM has trained over 100,000 LPS professionals through its comprehensive suite of Specialised Qualifications, Executive Development Programmes as well as Specialised In-House Workshops across the region – which includes Multinational Firms, ICT Conglomerates, Governments, and the Armed Forces.

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