Why analysts have high expectations for Singapore's manufacturing sector

Index is at 50.5.

According to DBS, market has remained fairly optimistic about the Purchasing Manager Index (May) that will be announced this evening.

Expectation is for the overall manufacturing sector to remain in expansion mode, with the index at 50.5, a tad higher than the previous month’s reading of 50.3.

Here's more from DBS:

This is essentially in line with our view that a marginal improvement is on the cards after the festive season slump in the early part of the year.

Moreover, the import index in the previous month has risen significantly. This probably suggests that manufacturers will be ramping up their production in anticipation of stronger demand as well as to restock their inventory.

Note that stock of finished goods and inventory in the previous month has fallen. From a broader perspective, the global economy is in the midst of this gradual normalisation process.

It’ll not be another V-shaped rebound as seen in 2010. Rather, this on-going recovery is expected to be a slow grind. But hopefully, this will be more sustainable as well.

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