Manufacturing sentiment in Singapore stayed optimistic in April for the tenth consecutive month.

Data released by the Singapore Institute of Purchasing and Materials Management (SIPMM) showed a 0.1 point in the republic’s Purchasing Managers’ Index (PMI) to 50.9.

This follows the 50.8 point expansion logged in the month before and marks the highest level the metric has been at since December 2018, when the PMI was 51.1.

The PMI index is a key barometer indicating a nation’s manufacturing activity. A reading above 50 indicates an expansion in output, while that below 50 points to an industry shrinkage.

SIPMM attributes the latest showing to higher expansion rates in the indexes of new orders, new exports and employment.

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The indexes of imports, input prices and order backlog had also expanded at a higher rate.

These improvements more than made up for the slower expansion rates seen in factory output, inventory and supplier deliveries.

Meanwhile, the electronics PMI – a separate metric – edged up by 0.1 points to 50.7 in April. 

This follows jumps in the indexes of new orders and new exports that come on the back of global trade demand.

However, slower expansions were seen in factory output, inventory and supplier deliveries.

To UOB economist Barnabas Gan, the expansion in Singapore’s overall and electronic PMI bodes well for the republic’s economic growth.

“The uptick in PMI has also been supported by the export sector, an important growth driver for Singapore given that total trade to GDP was 355.9% in 2020,” he adds.

However, Gan warns that the manufacturing industry may need additional resources in the form of labour to fulfil outstanding orders in the year ahead.

This comes as the order backlog edged up to 50.8 in April from the 50.5 registered in March, Gan elaborates.

Looking ahead, he expects the labour market to improve further, after its second consecutive month of expansion in April.

A key concern that several manufacturers from the process industries have is the manpower crunch that is a result of the recent entry ban on workers from India, notes Sophia Poh, vice-president for industry engagement and development at SIPMM.

Since April 23, non-resident arrivals from India have been restricted as the country grapples with a Covid-19 crisis. 

"Supply disruptions remain a major concern for manufacturers despite an upsurge in new orders,” adds Poh.

Even as this ban "may prove a near-term drag on any nascent recovery that was expected", steps have already been taken to mitigate this, suggests Selena Ling, who heads the treasury research and strategy division at OCBC.

These steps include the option to source for labour from alternative areas as well as policy support.

Ling is of the view that any downside risks posed by labour supply disruptions will be “offset” as long as the semiconductor segment stays buoyant.

Gan too appears optimistic of PMI improving this year. Upside risks he is looking at include a quicker-than-expected vaccine roll-out, and downside risks revolving around pandemic uncertainties - with the rise of new variants - and geopolitical tensions.

Singapore’s latest PMI reading ties in well with the strong performance registered in the region.

The Caixin China general manufacturing PMI for one had jumped to 51.9, from March's 11-month low of 50.6.

Elsewhere, South Korea's manufacturing PMI remained expansionary despite edged down in April. Taiwan's PMI reached a more-than-decade high of 62.4, while Japan's reached a three-year high of 53.6.

Highs were also seen in the PMI figures closer home, with Malaysia's PMI reversing into the green with 53.9 point expansion in April.