Private sector economy in Singapore edges closer to stagnation
The rate of expansion eased for a third month and edged closer to stagnation.
The slowdown in the private economy’s performance came amid an end to a three-month growth run in output and a weaker rate of improvement in demand.
Meanwhile, export orders declined and employment was reduced for the first time since August 2017, helping to reduce staffing costs.
Nonetheless, purchasing prices and input delivery times increased despite buying activity falling.
The headline Nikkei Singapore Purchasing Managers’ Index (PMI) fell in January to 50.1, from 52.7 during December, registering only just above the no-change mark of 50.0 which signals stagnation.
The headline figure indicated a fractional rate of improvement in private sector economic conditions that was also the weakest in the current four-month sequence of expansion.
One factor that slowed growth momentum in Singapore was output, which stopped expanding in January for the first time since last September.
According to panellists, the underlying growth trend had deteriorated.
Indeed, this was further evidenced by data on new work in January.
The increase in new business was only modest and among the weakest recorded across the past twoand-a-half years.
However, sales to foreign clients declined at an accelerated pace amid reduced workloads from Southeast Asia.
Slower growth in order books reportedly curbed recruitment in Singapore during January, ending a 16-month run of job creation in the private sector.
This in turn helped reduce input costs, with survey data indicating the first monthly fall in staff expenses since last September.
Meanwhile, purchase prices rose at the weakest pace in six months.
Subsequently, overall operating expenses dropped at the sharpest rate in six-and-a-half years of data collection.
Despite diminished pressures on margins, further cost-cutting efforts were evidenced by reductions in buying activity and inventories.
These decisions were reportedly motivated by industry slowdowns and already-ample stock levels.
Nonetheless, supply chains continued to be squeezed, as input lead times lengthened to a stronger extent.
Operational and administrative backlogs also grew in January across Singapore’s private sector.
That said, the rate of accumulation eased to just a mild pace.
Firms predict that output will be higher in 12 months’ time, with new branch openings and positive sales projections underpinning optimism.
However, confidence eased to the weakest in six months amid concerns of a wider economic slowdown. ■