The Singapore private sector continued to expand in October, although its expansion slowed amid supply constraints and high inflation.  

“October’s S&P Global Singapore PMI data brought positive news again in the form of a solid expansion in private sector activity,” said Jingyi Pan, an economics associate director at S&P Global Market Intelligence, in a note on Tuesday.  

The headline seasonally adjusted S&P Global Singapore Purchasing Manager’s Index – a composite single-figure indicator of performance – came in at 55.5 in October, down from 56.6 in September. Any reading above 50.0 indicates sector expansion.    

This meant that the sector has grown every month for the last 20 months.

“Growth in Singapore’s private sector output at the start of the fourth quarter had been underpinned by a strong increase in new business inflows, with anecdotal evidence pointing to improvements in underlying demand conditions and with successful promotion efforts driving the expansion,” Pan said in a separate, exclusive interview with Diplomatic Network (Asia) on Tuesday.

“Sector data further showed that the rise expansion in new work had been led by the wholesale & retail segment, but other sectors including manufacturing and consumer services also registered growth.”

Singapore’s private sector 

Despite the expansion of the sector slowing to a four-month low, the headline figure was still above this year’s average so far.

“Output growth accelerated from September and was above the year-to-date average, thereby signaling a positive start to the final quarter of the year,” Jingyi Pan said.

New business growth in Singapore’s private sector surged, driving faster output expansion and causing a buildup in pending work. To handle the growing workload, companies raised staffing levels for the sixth consecutive month.

However, purchasing activity remained steady as firms held adequate inventory, indicating they were well-prepared to meet current demand without needing additional input.

This PMI data suggests strong demand in the economy, with companies actively scaling production and employment while managing supply levels efficiently.

Supply delays loomed though with stocks falling amid shipping delays and labor constraints at vendors.

Additionally, inflation was on the rise as purchasing prices and staff costs squeezed vendor margins. Purchasing prices were particularly hot with its rate of inflation climbing to an eight-month high amid rising transport and material prices.

“Singaporean private sector firms opted to share rising cost burdens with clients, which led selling prices to rise at the quickest pace since February,” said S&P Global.

“With firms passing on the increase in costs, the concern is that further substantial increases may negatively affect demand, though we have yet to observe signs of such,” Pan said in an interview with DNA.

Looking ahead  

The rest of the year is looking good, with sustained growth likely as the Lion City enters the new year.  

“Forward-looking indicators also hinted at the likelihood for growth to be sustained into the end of the year,” Pan said. ” 

“This was with new orders rising at a slower but still sharp rate in October. The level of outstanding business also increased markedly to indicate a strong pipeline for activity.” 

In addition to this, sentiment was at a high with business confidence at its second-highest level in over three years, ranked just behind last month.  

“Businesses in Singapore appear encouraged by another sharp rise in new work inflows at the start of the final quarter of 2024, holding hopes that further business development efforts can keep the momentum going,” Pan told DNA.

“Additionally, hopes that the passage of the US election could reduce uncertainty, coupled with supportive policy measures from mainland China that could lift external conditions have also transpired in surveys from the region.”

Data   

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. 

*Update 05/11/2024: added quotes from an exclusive interview with Jingyi Pan.