Why the easing in Singapore PMI is a glass half full scenario for analysts

It still hovers in the expansion territory.

Singapore Purchasing Managers' Index (PMI) recorded a marginal dip in February, easing to 50.9 with the slower rate of expansion in factory output, new orders, new exports, and lower imports.

This came as the electronics PMI decline by 0.4 to 51.4 in the said month, attributed to a drop of 0.6 point in factory output, as well as slower expansion in new orders, new exports, imports, and employment.

According to DBS, this pullback was imminent, noting that although PMI has eased, it is still on the expansionary side.

"Our view is that a pullback was imminent. The rapid pace of expansion in the 2016 fourth quarter was not sustainable partly due to the capacity constraint in some industries, the Lunar New Year effect (the festive season lull in China stretches to early-February) and industry specific cycles (i.e., pharmaceutical). Hence, the moderation doesn’t come as a surprise at all," DBS noted.

More so, Singapore is not the only one seeing such trend. DBS noted that the easing in PMI is also being observed in key markets such as China, US, and the Eurozone, which bodes well for the outlook of the sector in the near-term.

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