The team at RHB Group Research says it foresees a slight moderation in Singapore’s Purchasing Managers’ Index (PMI) in the 1Q2021 despite the positive momentum witnessed towards the end of 2020.

According to the team in an economics view report dated Feb 3, manufacturers remain “cautiously optimistic” over the growth outlook in 2021. The outlook is due mainly to concerns over the resurgence of infections and countries’ responses to the rising number of infections.

The way they see it, a potential disruption in the global supply chain may provide additional downside risk to the PMI momentum – particularly for the semiconductor industry.

“Although electronics PMI declined slightly for January, the outlook for its growth remains robust. The manufacturing industrial production (IPI) growth for the electronics sector, especially the semiconductor segment and precision engineering, have been on a steady rise since the easing of the circuit breaker measures,” writes the team.


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“December’s non-oil domestic exports data had also indicated that overall growth was mainly supported by the electronics sector on account to strong demand from the US, South Korea and Taiwan. This is in line with the recent spurt in global semiconductor demand,” it adds.

According to the Semiconductor Industry Association (SIA), the US accounts to 45% of the global semiconductor market share as of 2018, followed by Korea at 24%, Japan and EU at 9% respectively.

“We expect the momentum for the electronics and precision engineering to remain resilient in the next 2 months with robust demand for semiconductors, which tallies with the increasing demand for 5G network and telecommuting services”.

On that, the team at RHB have maintained its GDP forecast for 2021 at 5.5% y-o-y from 2020’s -6.0% y-o-y.

The forecast is pegged on the manufacturing sector – which accounts for some 21% of Singapore’s GDP – to be a bright spot for the year.

“As for our monetary policy stance, we maintain our view of a 0% rate of appreciation for the S$NEER for its April 2021 meeting,” says the team.


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Singapore’s PMI figures revealed in January printed 50.7 compared to the Bloomberg consensus estimate of 50.9 and the December reading of 50.5.

“In terms of its subcomponents, PMI for new orders and new export orders continued to expand at 51.1 and 50.9 respectively. Moreover, the indices for production, stocks of finished goods and imports also continued to rise above 50,” it says.

“PMI for order backlog remained at 50.2 for its second month. Meanwhile, subcomponents such as inventory and input price moderated in January to 50.8 from 51 and 50.5 from 50.6 respectively,” it adds.

The team also noted that the biggest jump in January’s PMI is its employment index, which remained below 50, but logged growth to 49.8 from 49.3 the month before.

“The gradual reopening of the economy domestically and globally are leading to an improvement in the labour market. Barring any downside surprises, we should see further hiring ahead.”