Manufacturing PMI drops for seventh consecutive month in January

Headline PMI sank to 49.0 last month.

Manufacturers in Singapore opened the year on a low note, with the overall Purchasing Managers’ Index (PMI) dropping to 49.0 in the first month of the year.

This marks a decline of 0.5 point and also ushers in the seventh consecutive month of PMI contraction. A reading above 50 indicates that business conditions are improving, while a score below 50 implies that business conditions are worsening.

Electronics PMI also fell last month, down to 48.5 from 48.9 in December. All key sub-indexes—namely production, new orders, and employment indicators—were also down for the month.

According to DBS, this reflects manufacturers’ anticipation of weaker demand ahead. And despite slight upticks on inventory and stocks of finished goods, DBS warned that these indicators are also reinforcing the dire market conditions given that inventory stocks were not translated into sales.

DBS blamed the persistently weak PMI readings on low global demand, saying that the poor figures shouldn’t come as a surprise as the PMIs of other key markets have also remained stuck in contraction territory.

“Although historically manufacturers will front-load their orders ahead of the Lunar New Year, chance is high than this festive season will be a relatively quiet one. The cold spell that hit many parts of Asia will likely dampen consumer spending as well as industrial activity. This will have a knock-on impact on Singapore’s PMIs within these few months,” DBS said.