Local manufacturers likely to be more cautious when it comes to hiring intentions:OCBC

The mixed February manufacturing PMI readings suggest that the post-CNY growth momentum may not be all smooth-sailing.

According to OCBC, the pickup in momentum for both the manufacturing and electronics PMI in February are encouraging, especially given the higher overall new orders, export orders, production and employment gauges which suggest that Q1 2011 momentum may not be as soft as initially expected following Christmas season. This is also consistent with the January industrial production and NODX data that we saw earlier.

However, the external headwinds, currently in the form of Middle East poltical unrest and attendant higher oil prices with adverse implications for inflation, may also weigh on market sentiment in the near-term.

Hence, local manufacturers may also adopt a slightly more cautious stance when it comes to capex and hiring intentions.