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Private sector growth slows in Singapore

Staff Writer |
Growth in Singapore’s private sector lost momentum at the end of the first quarter, with slower expansions in both output and new orders.

Firms continued to step up purchasing activity and boost hiring, but at a reduced pace in both cases.

Input inventories grew marginally.

Optimism dipped to a six-month low.

On the price front, inflationary pressures showed signs of cooling as wages rose at a noticeably slower pace than in February.

Supply chains remained stretched.

The headline Nikkei Singapore Purchasing Managers’ Index (PMI) fell from 55.3 in February to 53.7 in March.

Despite the fall, the latest reading still indicated a solid improvement in the health of the sector.

Moreover, the average PMI for the first quarter was the highest in nearly four years.

The headline index is a composite index based on questions on new orders, output, employment, suppliers’ delivery times and inventories, thereby providing an early indication of the health of the private sector economy.

Overall client demand improved further in March, but at a slower pace amid limited gains in foreign sales.

Inflows of new export orders were broadly stagnant, contrasting with expansion in recent months.

The slowdown in new business growth coincided with a softer rise in output.

Employment across Singapore’s private sector rose at a weaker pace in March.

While the latest growth was the slowest in the first quarter, it remained solid overall.

Anecdotal evidence revealed companies continued to hire more workers due to increased business requirements.

Reflective of a slower rise in new orders, companies reported a smaller increase in backlogs of work.

The rate of accumulation was notably down from a survey-record pace in February.

Companies continued to scale up purchasing activity at the end of the opening quarter, though the pace of buying was slower than February and modest overall.

The slower growth in input purchases corresponded to a smaller build-up in stocks.

March data indicated that cost pressures cooled markedly at Singaporean private sector firms.

Overall input prices rose at the slowest rate since last December, but nonetheless contributed to a firm rise in prices charged.

Greater cost burdens were connected to higher prices for raw materials, transport and wages, according to survey evidence.

Business confidence towards the 12-month outlook for output slipped to a six-month low during March.

Positive expectations were generally linked to higher sales forecasts, promotional activity, new product launches and planned business expansions.

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