SINGAPORE – The pace of manufacturing activity in Singapore took a hit from Russia’s invasion of Ukraine, which has driven up prices and disrupted supplies of energy and industrial metals worldwide.
The purchasing managers’ index (PMI), a key barometer of the Republic’s manufacturing sector, managed to remain within the expansion territory for the 21st consecutive month.
But the March PMI reading came in at 50.1, down 0.1 point from February, said the Singapore Institute of Purchasing and Materials Management (SIPMM) on Monday (April 4).
A reading above 50 indicates growth, while one below 50 signals contraction.
The PMI, which is based on a monthly survey of logistic and procurement professionals, has been slowing since January. The gauge ended 2021 at 50.7.
The electronics sector PMI also posted a decrease of 0.1 point from February to record a slower rate of expansion at 50.4. That was still the 20th month of consecutive expansion for the sector.
Ms Sophia Poh, SIPMM vice-president for industry engagement and development, said the overall manufacturing sector has ended the first quarter signalling growth moderation, amid a slower pace of expansion in the electronics sector.
“The continuing Russia-Ukraine conflict has clouded the outlook of the manufacturing sector, with greater concern on the rising energy cost and supply disruptions, coupled with increased inflationary pressures,” she said.
SIPMM said the PMI reading for overall manufacturing dipped in March due to slower expansion in new orders and factory output, as well as a faster contraction of inventories.
Supplier deliveries also posted slower expansion, while rising cost pressures were flagged by input prices recording their highest reading since October 2013.
However, new exports and employment posted faster expansion rates. Imports, input prices and order backlogs also posted faster expansion rates.
The drop in electronics PMI was attributed to a first-time contraction in factory output, and a faster contraction in inventories and finished goods. Supplier deliveries also reverted to a contraction.
Still, faster expansion rates were recorded for the indexes of new orders, new exports, employment, imports, input prices and order backlog.
Analysts said the gradual decline in Singapore’s PMI reading since the start of this year shows the impact of increased uncertainties due to rising energy costs, renewed supply disruption and heightened geopolitical risks.
It is in line with PMI readings globally, which show the impact of tightened supply chain bottlenecks, dampened demand and surging prices, with the gauge in China slumping by the most since the onset of the Covid-19 pandemic as lockdowns took their toll.
UOB economist Barnabas Gan said his view that Singapore’s manufacturing sector is one of the key economic support pillars remains unchanged.
“However, we note that risks pertaining to supply chain disruptions on the back of Covid-19 and geopolitical tensions are increasingly tangible at this point. In the same vein, higher oil prices have invariably lifted the input price index, which in turn would magnify inflation risks in the coming months.”
Mr Gan expects full-year manufacturing growth of 4 per cent for 2022, compared with expansions of 13.2 per cent in 2021 and 7.5 per cent in 2020.
Join ST’s Telegram channel and get the latest breaking news delivered to you.
Read 3 articles and stand to win rewards
Spin the wheel now
MCI (P) 031/10/2021, MCI (P) 032/10/2021. Published by SPH Media Limited, Co. Regn. No. 202120748H. Copyright © 2021 SPH Media Limited. All rights reserved.