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<!-- headline one : start --><TR>Factory output declines for first time in 3 months
</TR><!-- headline one : end --><TR>Fall within expectations in view of global slump and as demand drops </TR><!-- Author --><TR><TD class="padlrt8 georgia11 darkgrey bold" colSpan=2>By Robin Chan
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THE one economic indicator here that has proved resilient has finally given in to the mounting financial pressure.
<TABLE width=200 align=left valign="top"><TBODY><TR><TD class=padr8><!-- Vodcast --><!-- Background Story --><STYLE type=text/css> #related .quote {background-color:#E7F7FF; padding:8px;margin:0px 0px 5px 0px;} #related .quote .headline {font-family: Verdana, Arial, Helvetica, sans-serif; font-size:10px;font-weight:bold; border-bottom:3px double #007BFF; color:#036; text-transform:uppercase; padding-bottom:5px;} #related .quote .text {font-size:11px;color:#036;padding:5px 0px;} </STYLE>GLOBAL SLOWDOWN
'There is a growing sense that economies around the world are finally showing some sort of a drag from the financial turmoil of the past year.'
Mr David Cohen, director of Asian forecasting at Action Economics
</TD></TR></TBODY></TABLE>The monthly purchasing manager's index (PMI), which points to upcoming factory output, fell from 50.6 in August to 49.5 last month.
Its 1.1 point fall was the first contraction in three months and the largest decline recorded since the beginning of the year.
A reading below 50 indicates a contraction, while a reading above 50 indicates an expansion.
Economists are not surprised the figure has finally come down. They believed the PMI has been out of sync with the economy in recent months with its positive readings - July's reading was 51.6 - amid a global downturn.
Citigroup's Mr Kit Wei Zheng said the figures 'supported the bearish view of the economy' and exports are likely to continue to contract until the first half of next year.
Mr David Cohen, director of Asian forecasting at Action Economics, said: 'This was more or less within expectations as it is coming against the backdrop of the general deterioration scene.
'There is a growing sense that economies around the world are finally showing some sort of a drag from the financial turmoil of the past year.'
Key manufacturing indicators in the United States and Japan have shown larger than expected contractions recently.
The United States' manufacturing index plummeted to 43.5 for September, its lowest level since October 2001.
The quarterly tankan survey of manufacturers by the Bank of Japan also showed sentiment among large manufacturers to be at its lowest in five years.
Ms Janice Ong, executive director of the Singapore Institute of Purchasing & Materials Management (SIPMM), which publishes the PMI, attributed the fall to weak demand here and overseas.
The new orders index fell to 49.8, a 0.6 point drop from August after a three-month expansion, and the new export orders index grew by 0.7 from August but was still in contraction with a 48.9 reading.
The employment index also sent worrying signals by contracting for the 10th straight month. It lost another 2.2 points to hit 46.4 in September.
'We are likely to see softening in the job market, which would translate to some job losses. But Singapore has a safety net of foreign workers, so the job threat will not be immediate,' said Mr Cohen.
The electronics sector employment index contracted for its third consecutive month, to 43.4.
This is in line with the restructuring story in Singapore's electronics industry, which has seen firms move to countries where production costs are lower, said Mr Kit.
So the bright spot of an expansion in the electronics index of 0.1 point to 53 may not actually be reflected in higher industrial output in coming months, he added. [email protected]
</TR>
<!-- headline one : start --><TR>Factory output declines for first time in 3 months
</TR><!-- headline one : end --><TR>Fall within expectations in view of global slump and as demand drops </TR><!-- Author --><TR><TD class="padlrt8 georgia11 darkgrey bold" colSpan=2>By Robin Chan
</TD></TR><!-- show image if available --></TBODY></TABLE>
<!-- START OF : div id="storytext"--><!-- more than 4 paragraphs -->
THE one economic indicator here that has proved resilient has finally given in to the mounting financial pressure.
<TABLE width=200 align=left valign="top"><TBODY><TR><TD class=padr8><!-- Vodcast --><!-- Background Story --><STYLE type=text/css> #related .quote {background-color:#E7F7FF; padding:8px;margin:0px 0px 5px 0px;} #related .quote .headline {font-family: Verdana, Arial, Helvetica, sans-serif; font-size:10px;font-weight:bold; border-bottom:3px double #007BFF; color:#036; text-transform:uppercase; padding-bottom:5px;} #related .quote .text {font-size:11px;color:#036;padding:5px 0px;} </STYLE>GLOBAL SLOWDOWN
'There is a growing sense that economies around the world are finally showing some sort of a drag from the financial turmoil of the past year.'
Mr David Cohen, director of Asian forecasting at Action Economics
</TD></TR></TBODY></TABLE>The monthly purchasing manager's index (PMI), which points to upcoming factory output, fell from 50.6 in August to 49.5 last month.
Its 1.1 point fall was the first contraction in three months and the largest decline recorded since the beginning of the year.
A reading below 50 indicates a contraction, while a reading above 50 indicates an expansion.
Economists are not surprised the figure has finally come down. They believed the PMI has been out of sync with the economy in recent months with its positive readings - July's reading was 51.6 - amid a global downturn.
Citigroup's Mr Kit Wei Zheng said the figures 'supported the bearish view of the economy' and exports are likely to continue to contract until the first half of next year.
Mr David Cohen, director of Asian forecasting at Action Economics, said: 'This was more or less within expectations as it is coming against the backdrop of the general deterioration scene.
'There is a growing sense that economies around the world are finally showing some sort of a drag from the financial turmoil of the past year.'
Key manufacturing indicators in the United States and Japan have shown larger than expected contractions recently.
The United States' manufacturing index plummeted to 43.5 for September, its lowest level since October 2001.
The quarterly tankan survey of manufacturers by the Bank of Japan also showed sentiment among large manufacturers to be at its lowest in five years.
Ms Janice Ong, executive director of the Singapore Institute of Purchasing & Materials Management (SIPMM), which publishes the PMI, attributed the fall to weak demand here and overseas.
The new orders index fell to 49.8, a 0.6 point drop from August after a three-month expansion, and the new export orders index grew by 0.7 from August but was still in contraction with a 48.9 reading.
The employment index also sent worrying signals by contracting for the 10th straight month. It lost another 2.2 points to hit 46.4 in September.
'We are likely to see softening in the job market, which would translate to some job losses. But Singapore has a safety net of foreign workers, so the job threat will not be immediate,' said Mr Cohen.
The electronics sector employment index contracted for its third consecutive month, to 43.4.
This is in line with the restructuring story in Singapore's electronics industry, which has seen firms move to countries where production costs are lower, said Mr Kit.
So the bright spot of an expansion in the electronics index of 0.1 point to 53 may not actually be reflected in higher industrial output in coming months, he added. [email protected]
