Private sector PMI hits 11-month high in January

Overall output and hiring levels rose.

Singaporean private sector businesses saw a further improvement in overall operating conditions at the start of 2016, with the Nikkei Purchasing Managers' Index (PMI) hitting an 11-month high in January.

The index stood at 52.5 last month, buoyed by robust purchasing activity, a sharp increase in overall output and a steep growth in new export business. New work and staff numbers also rose marginally over the month.

A number of firms mentioned raising output due to improving underlying client demand and higher new orders. However, the marginal growth in new work suggested that sluggish domestic demand dampened growth in total new business, as new export work increased at the fastest pace since the survey began in August 2012.

“Operating conditions continued to improve across Singapore’s private sector at the start of 2016, with output rising at a robust pace. However, the PMI sub-indices suggest that domestic demand remains relatively weak, as total new work increased only slightly despite a record increase in new export work," said Annabel Fiddes, Economist at Markit, which compiles the survey.

Companies that hired additional staff commented on efforts to boost operational capacity and new projects.

Private sector companies increased their purchasing activity again in January, with the rate of growth picking up from December to a solid pace. This in turn contributed to the fastest accumulation of pre-production stocks for 17 months.

“The data suggest that firms were generally optimistic towards the business outlook, with purchasing activity rising solidly and payrolls expanding slightly in January. Nonetheless, it’s likely that stronger domestic demand will be required to sustain the robust pace of output expansion seen in recent months, while uncertain global economic conditions also pose a downside risk to growth,” Fiddes added.