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Singapore’s factory activity expands in December for sixth consecutive month

SINGAPORE: Singapore’s factory activity expanded for the sixth consecutive month as demand continues to improve amid the COVID-19 pandemic. 

The Purchasing Managers’ Index (PMI) posted a marginal increase of 0.1 point from the previous month to record an expansion of 50.5 in December, data from the Singapore Institute of Purchasing & Materials Management (SIPMM) showed on Monday (Jan 4).

A PMI reading above 50 indicates that the manufacturing economy is generally expanding, while a figure below that threshold points to contraction. 

December’s reading was attributed to marginally higher expansion rates in the indexes of new orders, factory output, inventory and a slower contraction for the employment index, SIPMM said.

“The December PMI indicates that the overall manufacturing sector has ended the eventful year with a positive reading,” said Ms Sophia Poh, vice president of industry engagement and development at SIPMM.

“It is heartening to note that the sector is looking ahead to a brighter outlook for the new year even though it will take some time before wide-scale vaccination programmes can be implemented globally.”

READ: Singapore economy shrinks a record 5.8% in a pandemic-hit 2020

The new orders index of 50.8 was the highest reading since April 2019 when it was 50.9. 

However, the new exports index posted a lower expansion rate, at 50.7, down from November’s 50.9, which suggested that the higher expansion rate in new orders was fuelled by domestic consumption. 

In spite of an improved reading, the overall employment index had recorded contractions for 11 consecutive months, said SIPMM.

December’s electronics sector PMI rose 0.1 point from the previous month to record an expansion at 51.2. 

This was the fifth month of expansion for the electronics sector, and the highest reading since September 2018 when it was 51.4, SIPMM said.

READ: Despite ‘exceptionally testing’ COVID-19 year, Singapore can see light at the end of the tunnel: PM Lee

The latest electronics sector reading was attributed to faster expansion rates for the indexes of new orders, factory output and employment. 

The electronics employment index continued to expand for the second month after it first recorded contraction in February 2020. 

The electronics supplier deliveries index continued to contract for 11 months indicating possible supply disruptions due to COVID-19 restrictions in the global electronics markets.

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