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SINGAPORE ECONOMY

Manufacturing economy rebounds in May, boosted by electronics orders

Ryan Huang, ryanhuang@mediacorp.com.sg

CHANNEL NEWSASIA

The rebound was boosted by an expansion in the electronics sector. BLOOMBERG

SINGAPORE'S manufacturing economy turned the corner in May, after eight months of contraction.

The Purchasing Managers Index (PMI), compiled by the Singapore Institute of Purchasing and Materials Management posted a reading of 51.2 last month, up 2 points over April. A reading above 50 indicates the manufacturing economy is expanding.

The rise in the overall PMI was due to a first-time expansion in new orders, new export orders, inventory and stocks of finished goods.

"I think we are seeing green shoots in the global economy. There's a lot of hope that the government stimulus package in China is finally taking effect, and that should bode well for the regional economies especially for the export dependent economies such as Singapore," said Ms Selena Ling, head of Treasury Research and Strategy at OCBC Bank.

Singapore's overall PMI was also boosted by a second consecutive month of expansion for the electronics sector, which makes up a third of manufacturing output.

The corresponding electronics index for May showed a reading of 52.9, up 1.3 points from April, as a result of more new orders.

The positive data for Singapore comes on the back of similar good news out of China.

On Monday, China released data showing its manufacturing activity expanded in May for the third consecutive month.

Some analysts believe the latest PMI in Singapore points to a bottoming out for the manufacturing sector globally, although it's too early to say if the momentum can be sustained.

"It'll be a little premature to actually say that it's due to the export demand recovery in the G3 or G7 economies," said Ms Ling. "In all likelihood, we think that it's more due to regional demand, China for instance. We are looking for a sustainable rebound in the global economy and demand, and that really at the end of the day has to come from developed economies."

The monthly PMI figures are closely-watched in Singapore because manufacturing makes up a quarter of its economy.

From TODAY, Business – Wednesday, 03-Jun-2009

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