Price pressures loom over strong performance of Singapore’s private sector

Singapore’s private sector saw employment grow at a record pace in March as the sector’s participants remained positive about the future, although rising costs loomed.

The headline seasonally adjusted S&P Global Singapore Purchasing Manager’s Index, which is a composite single-figure indicator of the private sector’s performance – came in at 56.8 in February, up from 54.7 in January.  

Anything below 50.0 signals that the sector contracted during that month, while anything above indicates expansion.

Demand drives growth

“February’s PMI data showed that growth in Singapore’s private sector remained robust, supported by improvements in demand conditions,” said S&P Global Market Intelligence Economics Associate Director Jingyi Pan.  

“Additionally, a record rise in employment levels coupled with renewed growth in purchasing activity reflected confidence among firms for business activity to expand in the near-term.” 

March marked the 12^th consecutive month of improvements to business conditions for Singapore’s private sector. It was also the quickest rate of improvement that the sector has seen since October 2022.  

Incoming new business drove business activity expansion. This kept employment levels on the rise to support the ongoing workloads.  

The Transport and Information & Communication sectors saw the fastest rises in both new sales and activity. 

Inflation still threatens the sector, particularly due to higher transport costs and rising raw material and labor costs.  

“One area to watch remains price trends as the latest PMI survey showed that cost pressures have progressively heightened over the past three months,” Pan said.  

“This resulted in selling price inflation rising above the series average in the past two months. Elevated price pressures have created concerns among firms over the impact of rising costs on sales, which will be worth monitoring.” 

Selling prices also climbed at an elevated rate, S&P Global noted, as Singapore’s private sector shared the increased cost burdens with clients.

Singapore’s private sector outlook

Looking ahead, sentiment was still in positive territory but rising costs caused business confidence to slip below the series average. This echoed the previous month’s worries.  

Respondents said that they were concerned with rising costs hurting demand. 

The S&P Global Singapore PMI is compiled by S&P Global from responses to questionnaires sent to purchasing managers in a panel of around 400 private sector companies. The panel is stratified by detailed sector and company workforce size, based on contributions to GDP. The sectors covered by the survey include manufacturing, construction, wholesale, retail and services. 

Survey responses are collected in the second half of each month.