Singapore: COVID-19 and its impact on the PMI – UOB

Economist at UOB Group Barnabas Gan gives his opinion of the latest PMI figures in Singapore.

Key Quotes

“Singapore’s overall Purchasing Managers’ Index (PMI) fell 1.6 points to 48.7 in February 2020, marking the lowest level since September 2015 (at 48.6) and clocking the first time that the index fell below 50.0 after expanding in the last two months.”

“The fall in PMI readings were likely led by manufacturers’ concern surrounding the spread of the COVID-19 outbreak. According to the Singapore Institute of Purchasing & Materials Management (SIPMM), “manufacturers are increasingly concerned about the extent of this (supply chain) disruption especially when the rate of infections are increasing worldwide.”

“In line with global supply chain disruptions and the negative impacts to Asia’s manufacturing space, the fall in Singapore’s headline and electronic PMIs have been led by contractions in new orders, new exports, factory output, inventory and employment. China’s factories are also “expected to take longer-than-expected to return to their capacity prior to the COVID-19 outbreak”, given expectations for work resumption rate to increase towards 90% only by end-March 2020 for mid- and large- enterprises.1 All these suggest that global supply chain disruptions may have effectively capped export demand, which in turn dampened manufacturers’ confidence in February.”