Business conditions in Singapore’s private sector improved in March, with jammed backlogs hinting at a strong expansion capacity in the short term.
“March’s S&P Global Singapore PMI data brought positive news with business conditions improving for a second successive month since stalling at the start of the year,” said Jingyi Pan, an economics associate director at S&P Global Market Intelligence, on Thursday in S&P Global’s release.
The headline seasonally adjusted S&P Global Singapore Purchasing Manager’s Index posted 52.7 in March, up from 50.1 in February and 49.9 in January. Anything above the 50.0 point mark denotes expansion in the sector, while anything below means it contracted.
“The rate of output growth accelerated to a solid pace to suggest that the single month of contraction in January may have been a blip,” Pan said.
Analyst overview
Backlogs grew as a result of the new business as well as a fall in employment.
“We typically see the accumulation of backlogs as a useful barometer of the extent to which companies are struggling to cope with demand, and hence act as a leading indicator of the expansion of capacity through either investment or hiring,” Pan said in a separate interview with Diplomatic Network (Asia) on Thursday.
“The latest sharp rise in the volume of backlogged work provided an indication of higher activity in the coming months and may be accompanied by firms raising staffing levels if prolonged.”
Singapore’s private sector firms recorded a strong rise in new business, driven by improved demand conditions and “successes with business development efforts”, S&P Global said.
“Comments from panellists pointed to increased promotions, marketing events and efforts supporting the growth in new business. Others also mentioned that the launch of new products and services helping to lift sales in the first quarter,” Pan told DNA.
US President Trump’s tariffs
Singapore has been subjected to a 10% base tariff on its exports to the United States under President Donald Trump’s new trade measures.
Singapore’s Trade Minister Gan Kim Yong expressed disappointment over the United States imposing a 10% tariff on Singapore’s exports, according to a Reuters article on Thursday. The 10% rate is considerably lower than the tariffs imposed on several neighbouring Southeast Asian countries, which range from 32% to 49%.
The Future Output Index, which gauges business sentiment, posted below the long-run average level for a third straight month in March. The Future Output Index specifically measures business expectations for output over the next 12 months.
“Certainly, we have observed trade barrier-related uncertainty dampening confidence… Broadly, we see businesses in Singapore anticipating shifts in trade conditions ahead of tariff announcements in March, but there remains a cloud of uncertainty over how things will change as global markets adapt to the volatile updates,” Pan told DNA.
Despite the global uncertainty posed by US tariffs, Singapore’s private sector is still expecting higher sales amid a positive outlook for economic growth as sentiment improves after January’s dip.
