Singapore factory orders decline
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Factory activity in Singapore shrank for a third straight month in September, in line with much of Asia, as alarm bells over the health of the global economy rang louder.
Fewer manufacturers in trade-dependent Singapore felt confident enough about global sales to ramp up production ahead of Christmas, economists say.
They say a technical recession is now almost a foregone conclusion for Singapore. This is two straight quarters of contraction.
The economy shrank 0.7 per cent in the April to June quarter and is likely to have contracted again in the just-ended quarter.
Singapore’s Purchasing Managers’ Index (PMI), a guide to anticipated factory orders, fell to 48.7 last month, down from 49.1 in August – below the market consensus of 49.5. A reading above 50 signals expansion, while one below 50 indicates contraction.
This was mirrored across Asia, as major manufacturing hubs such as mainland China, South Korea and Taiwan posted slumps, too. Despite the downturn, economists hope a third round of quantitative easing (QE3) in the United States – a technical term for a huge money-printing exercise – will boost trade early next year.
Weak overseas demand is not the only culprit for the manufacturing slowdown, said DBS economist Irvin Seah, citing the Republic’s tight exchange rate and foreign labour policies.
