The purchasing managers’ index rose to 51 points in November, up from 50.8 points a month ago. — The Straits Times
SINGAPORE: Singapore’s manufacturing sector joined most of the region in a race to get ahead of Donald Trump’s proposed new tariffs when he takes office as US President in January.The purchasing managers’ index (PMI), a barometer of the sector, rose to 51 points in November, up from 50.8 a month earlier.
Readings above 50 indicate growth, while those below point to contraction.
Electronics was the key driver, with its PMI reading coming in at 51.6, up from 51.4 in October, achieving its highest point in more than six years, according to data from the Singapore Institute of Purchasing and Materials Management.
Elsewhere, India, along with North Asian markets China, South Korea and Taiwan, showed expansion, while South-East Asian markets that stayed above the 50-point zone included the Philippines, Thailand and Vietnam.
Only Malaysia and Indonesia signalled contraction.
For Singapore, November’s expansion marks the 15th consecutive month of growth for the overall manufacturing PMI and the 13th for electronics.
Commenting on the performance of the sub-indexes, NUS Business School’s Associate Professor Goh Puay Guan, from the Department of Analytics and Operations, said that the slightly slower growth of inputs compared with finished goods could indicate that manufacturers are drawing from existing inventories of raw materials.
“With a trend of increasing finished goods, however, inputs may need to catch up eventually,” he said.
In addition, the marginal fall in supplier deliveries could indicate that factories have more spare capacity currently as a result of slowdowns in major manufacturing hubs such as China.
“But this could also catch up if demand for finished goods continues to grow,” added Goh.
Meanwhile, some economists attributed the bump in factory output to companies rushing to fulfil orders before Trump’s proposed tariff hikes take effect.
During his presidential campaign, Trump proposed significant new tariffs on imports from Canada, Mexico, and China, which he plans to implement immediately upon taking office on Jan 20.
He had also mentioned a universal tariff of up to 20% on most foreign goods.
Both OCBC chief economist Selena Ling and Maybank Research senior economist Chua Hak Bin noted the move to “front load” factory output ahead of Trump’s inauguration, with the manufacturing sector likely to expand further over the short term.
Ling said this was reflected by the future business indicator, which continued to be encouraging.
Looking ahead, experts felt that there is sufficient momentum in the manufacturing sector to keep on expanding in 2025.
Goh said: “The trend would likely still be expansionary overall as the major economic regions are expected to grow.
“In terms of electronics, demand for semiconductors looks strong – with artificial intelligence and embedded chips being used in cars and devices. This would benefit the electronics sector as well.”
DBS Bank economist Chua Han Teng agreed, and added that Singapore’s electronics cluster, which accounts for nearly half of overall manufacturing output, should continue to lead the overall factory output expansion, as seen in the second half of 2024.
“The electronics manufacturing PMI has reached its highest mark since August 2018, outpacing the headline indicator for a ninth consecutive month.” — The Straits Times/ANN
