Singapore’s manufacturing economy has contracted for the first time after two months of expansion.
The Purchasing managers’ Index (PMI) for April was 49.7, a drop of 0.5 points from 50.2 in March.
A reading below 50 signals that the manufacturing economy is generally declining.
The fall was attributed to further contraction in inventory and employment as well as slower growth in production output.
“Though a dip was recorded, we should not be alarmed as most of the overall key indicators showed improvements,” Janice Ong, Executive director of the Singapore Institute of Purchasing & Materials Management (SIPMM) said.
“These indicators include new orders and new export orders, which expanded.”
At the same time, the electronics sector PMI held steady at 51.5 as new orders from domestic and overseas markets continued to expand.
Economists say PMI should rebound in May.
“The PMI reading for April suggests a rather mixed start to the second quarter, although seasonally we should see a pick up in manufacturing activity because the first quarter normally is the quiet period for businesses as they take a break from a busy fourth quarter. And as we head into the second quarter and beyond, things start to pick up pace,” Song Seng Wun, regional economist at CIMB said.
The softer PMI figure was in line with generally weaker April PMIs across Asia.
A report by Capital Economics said that the “poor numbers support (their) view that the industrial sector in Asia, especially the region’s most trade-dependent economies, such as Taiwan, are likely to struggle this year”.
But others were more optimistic.
“We saw slightly weaker reading although they still above 50 – in Taiwan, in Korea and to a certain extent in the chinese production numbers. But overall, if you take them together, with the orders still coming through we should still see a rebound in May as well,” said Song.