The S&P Global Asean Manufacturing PMI hits the third-highest on record, while East Asian economies remain in contraction territory
[SINGAPORE] The city-state’s overall factory activity in November rose for the fourth consecutive month, mirroring the growing manufacturing momentum in South-east Asia amid more subdued performance further north.
The purchasing managers’ index (PMI) rose to 50.2 last month, up 0.2 point from October, based on data from the Singapore Institute of Purchasing and Materials Management on Tuesday (Dec 2). This is the highest level in eight months.
A reading above 50 indicates expansion.
Electronics sector PMI also rose by 0.2 point to reach 50.6, marking the sixth straight month of expansion.
DBS senior economist Chua Han Teng noted that the electronics PMI continued to outperform its headline manufacturing counterpart, reflecting the positive momentum experienced by the electronics cluster.
This was underpinned by a combination of strong demand for artificial intelligence (AI)-related servers and server-related products, as well as US tariff exemptions on electronics goods, he said.
However, even if the new order and new export order sub-indices have been improving since April, OCBC chief economist Selena Ling said they are still shy of the first-quarter readings seen ahead of the US’ “Liberation Day” tariffs.
Still, AI-related demand could remain resilient well into the medium term, given that the electronics future business sub-index had risen, noted UOB associate economist Jester Koh.
“Tailwinds from future inventory restocking could provide additional support for electronics industrial production,” he said.
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Regional factory activity
Singapore’s PMI is in line with growing manufacturing momentum in South-east Asia, even as factory activity in East Asia remained mixed.
The S&P Global Asean Manufacturing PMI hit 53 in November, from 52.7 the month before. This was the third-highest print on record, surpassed only in October 2021 and September 2022.
The expansion was primarily led by Thailand, Indonesia and Malaysia. Vietnam remained firmly in expansion territory, even if its PMI fell slightly.
However, Maryam Baluch, economist at S&P Global Market Intelligence, said there were “some areas of concern” despite the overall positive performance.
“While confidence remains strongly positive, it is still below the historical average, suggesting a relatively cautious outlook for growth in the coming months,” she added. “This sentiment is also reflected in firms’ decisions regarding employment expansion, which has been marginal at best during the current three-month sequence of job creation.”
Elsewhere, China’s official PMI rose to 49.2 in November, up 0.2 point from the previous month. Meanwhile, the RatingDog China General Manufacturing PMI, a private index compiled by S&P Global, fell to 49.9, from 50.6 in October. The latter signals the first deterioration in manufacturing sector conditions since July.
Yao Yu, founder at RatingDog, noted that among the sub-indices, the recovery in new export orders did not drive a sustained expansion in manufacturing.
“Looking ahead, considering the need to sprint towards the annual 5 per cent growth target, there may be strengthened efforts on both the supply and demand sides at the end of the year,” he said. “The PMI is expected to present a weak expansion trend in December.”
In South Korea, the S&P Global PMI was unchanged at 49.4 in November, indicating a “marginal deterioration in the health of the manufacturing sector for the second consecutive month”.
“Both production volumes and new orders fell for the second consecutive month, with anecdotal evidence indicating that weakness in the domestic economy was compounded by the impact of tariffs and price fluctuations,” said Usamah Bhatti, economist at S&P Global Market Intelligence.
Taiwan’s PMI, compiled by S&P Global, rose to 48.8 in November, from 47.7. Even if it remained in contraction territory, the rate of reduction was the mildest since the current period of decline began in March.
Annabel Fiddes, economics associate director at S&P Global Market Intelligence, said the continued move towards the neutral 50 mark suggests that Taiwan’s manufacturing sector “has worked through most of the current challenging period and more stable conditions are now in sight”.
She added that the slower reductions in output and new orders were tentative signs that some firms are seeing a “relative improvement in demand” across major markets such as mainland China, the US and Europe.
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