Manufacturing outlook still patchy despite surprise June PMI uptick

It’s barely above the 50 level.

Singapore’s manufacturing outlook remains patchy despite the surprise uptick in the Purchasing Manager’s Index in June.

According to DBS, the headline number posted its second consecutive month of expansion at 50.4, up marginally from 50.2 in the previous month.

This was driven by an expansion in electronics PMI, which spiked to a reading of 50.3, from 49.8 previously.

“However, we have to take this set of figures with a pinch of salt. The PMI is just barely above the 50 level. Sustainability of the current expansion is questionable given the poor performance in regional PMIs. PMIs in Korea, Taiwan, India, Japan and Vietnam have all fallen. Even though China’s Markit PMI has risen, it is nevertheless still in contraction,” DBS said.

“More importantly, the PMI may not necessarily provide a true indication of the performance of the manufacturing sector. Often, the PMIs do not correspond with the actual industrial output. Ultimately, the PMI is merely a sentiment gauge of the purchasing managers within the manufacturing sector. And sentiments do swing,” the report added.

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