, Singapore

Here's the significant impact of China's PMI on Singapore

The next 6-12 months will be crucial.

According to DBS, most recent China PMI has bounced back to expansion mode. While it remains to be seen whether that will be sustainable, China’s manufacturing outlook will have significant impact on the that of Singapore’s in the next 6-12 months. 

With the tepid recovery in the US and the recession in Europe, China remains the only pillar that local manufacturers are clinching on. China policymakers are aiming for a slower growth pace. As long as the slowdown is calibrated and measured, it should notlead to a significant decline in Asia consumer demand.

Here's more:

It is a pleasant surprise that Singapore’s overall manufacturing PMI has continued to buck the regional trend. Headline manufacturing PMI (July) was up by 0.1 to 51.8. This is the fifth consecutive months of expansion.

The sub-indices of new orders, new export orders and production had all headed higher in July. This suggests that the manufacturing sector has been resilient against the external headwinds and production activity has been holding up.

That said,the headline number and the inventory sub-index appeared to have peaked. Employment index has also moderated substantially. This could imply a more subdued production level in the coming months.

Another notable trend in the report is that the electronics PMI has eased. Electronics PMI moderated by 0.9pts to 50.3. This is consistent with our long held view that the electronics industry is done with its earlier restocking and production should ease with the anticipation of weaker demand ahead.

Almost every single sub-index within the electronics PMI is down for the month.

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