Exports contract for the 6th consecutive month

Domestic demand boosted private economy growth.

Even with the city-state's private sector economy showing robustness in August, with both output and new orders rising further and at faster rates, new export business fell for the six month in a row.

According to the latest report by Nikkei, Singapore Purchasing Managers Index (PMI) rose from 50.7 to 52.3 in August, signalling the fourth succeeding monthly improvement in overall operating conditions.

However, this is mostly driven by improved domestic demand since export sales continued to decline, albeit at the weakest pace since March.

For IHS Markit economist Annabel Fiddes, the data indicated that the city-state has stepped up a gear in August, with output rising solidly on the back of strongest rise in total new work.

"Demand from overseas remained weak, however, with export sales declining for the sixth month running. Therefore, it appeared that stronger domestic demand supported the latest rise in new work, as challenging global economic conditions continue to weigh on new export business," Fiddes said.

Meanwhile the report also noted that purchasing activity returned to growth in August after a marginal reduction in July.

"Furthermore, the rate at which companies raised their input buying was the fastest since January," the report mentioned.

But despite a renewed upturn in purchasing activity, companies reported a further decline in inventories of inputs.

"A solid increase in backlogs of work meanwhile suggests that Singaporean private sector firms may raise output further in the coming months, particularly with purchasing activity moving back into growth territory," Fiddes said.

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