Singapore PMIs for December have turned out mixed

Singapore PMIs for December have turned out mixed. Although overall manufacturing PMI has risen further to 49.5, from 49.2 previously, there's nothing to cheer about. The headline number is still stuck in contraction territory. And the pickup is more likely due to manufacturers front-loading production ahead of the Lunar New Year lull period in February. Moreover, electronics PMI has dipped marginally by 0.1-pt to 48.9. And while the production sub-index for both manufacturing and electronics PMIs have picked up, it was marred by mixed showings in new orders (including export orders) indices. 

Producers are clearly running down their stocks of finished goods but at the same time building up their inventory level in anticipation of stronger orders. That is, while we can expect some further improvement in the PMIs in the immediate term, it will not be sustainable. This is not an upward trend per se but purely seasonal effect at play. Global demand is still weak, which will continue to weigh down on the outlook for the manufacturing sector in the coming months.