Increased orders, output and inventory lift November PMI
By CHUANG PECK MING
(SINGAPORE) Singapore's factories are still humming along strongly as the readings for the latest purchasing managers' index (PMI) - a key production indicator - show the manufacturing sector continued to expand in November for an eighth straight month.
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Increased orders as well as rising production output and inventory lifted November's PMI, released yesterday, 1.2 points from the previous month to 54.6, offering a reassuring note that the manufacturing sector remains on the expansion path.
The index for overall production output, which rose 1.5 points from October, hit 57.9 - the highest reading since August 2004.
'The latest (PMI) readings certainly bode well for the sustained growth in the economy's key growth engine even towards the end of the year,' said Janice Ong, executive director of the Singapore Institute of Purchasing & Materials Management.
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The institute compiles the index by polling over 200 purchasing executives, the people who order equipment and materials for upcoming production schedules. A PMI reading below 50 indicates a contraction in production, while a reading above 50 indicates expansion.
The electronics sector PMI rose even higher, by 1.9 points, to 56.3 in a fifth consecutive month of expansion. The index for electronics output, which accounts for about half of Singapore's non-oil exports, hit a new high of 60.8.
'Anecdotal evidence suggests that many companies were getting significant new orders from North-east Asia, especially China and India,' Ms Ong said. 'What is more encouraging is that the overall improvements in new orders and new export orders were broad-based across most sectors of the manufacturing economy.'
Purchasing managers reported that new orders in November rose faster than in the previous month. The index for local and overseas orders gained 1.1 points to reach 55.7, the seventh monthly increase in a row. New orders for the electronics sector rose 4.5 points to 58.0. The new export orders index alone inched up 1.0 point to 54.1, while the sub-index for the electronics sector jumped 6.7 points to 58.7.
'The weaker Singapore dollar, as compared with the major European currencies, has boosted the export competitiveness of local manufacturers,' Ms Ong said.
But the strong demand reflected in the local and overseas orders has put pressure on raw materials. Thus the overall input prices index, which dipped 1.5 points to 49.6 in October, sprung back and raced to 54.8 last month.
Electronics input prices index, which also fell in the previous month, reverted to expansion mode in November, bouncing back from 46.1 to 53.8.
'The overall higher input prices suggest an escalating demand for raw materials, especially for the semiconductor components,' Ms Ong said.
The PMI for overall stocks of finished goods and employment continued to grow but at a slower pace. The index for overall stocks of finished goods dropped 4.8 points to 51.3, while the job index slipped 0.7 point to 50.9.
'With a faster-than-predicted housing slowdown and weaker consumer spending in the United States, local companies are still exercising care in managing their business activities - and this includes their hiring plans despite an increase in demand for their orders,' Ms Ong said.
