February PMI declines to 50.2

Seasonal factors, such as the Lunar New Year, may have affected the decline.

The Singapore Institute of Purchasing and Materials Management reported the February Purchasing Managers' Index (PMI) fell marginally 0.4 points to 50.2. The reading was the deepest since April 2020, during which Singapore introduced a circuit breaker. Likewise, the electronic PMI registered a decline of 0.3 points to post a slower expansion rate of 50.5.

UOB said the decline in PMI may have been due to seasonal factors, such as the Lunar New Year, and a relatively shorter month. Even so, the expansion in exports, factory output, and employment suggest that Singapore's manufacturing and exports environment stayed buoyant despite the lull period. Separately, whilst UOB had voiced some risks of supply disruptions in their previous PMI report, the advance in the supply deliveries index to 50.5 in February 2022 suggested little evidence underlining supply disruptions in the recent reading.

UOB concluded Singapore's manufacturing sector as one of the key economic support pillars remains unchanged, even as the decline in PMI reading for February was likely due to seasonal factors. For 2022, it expects full-year manufacturing to grow by an average of 4.0%, underpinned by the buoyant global trade activity expected for the year ahead. Notwithstanding the positive outlook, it said it is aware of near-term inflation risks on the back of possible supply disruptions, especially given the geopolitical noise in the backdrop amid higher oil prices.