Things appear to have worsened for the manufacturing sector in December as the latest leading indicator of factory orders took another dip last month.
The purchasing managers' index (PMI) for December released yesterday dipped 0.2 point from the previous month to 48.6 - its sixth straight month of decline.
"The contraction in the overall PMI was attributed to further decline in new orders, new export orders and production output," said the Singapore Institute of Purchasing & Materials Management which compiles the index.
December's PMI may confound flash estimates for fourth-quarter economic growth, which were released on Wednesday. But private-sector economists reckon it will not have any direct impact.
Defying expectations, the flash estimates show that the economy grew 1.8 per cent in Q4 2012 from Q3, in seasonally adjusted, annualised terms.
This means Singapore has once again averted a technical recession, which would have followed if its gross domestic product (GDP) had dipped after a revised, sharper 6.3 per cent drop in Q3.
Citigroup's Kit Wei Zheng said the flash estimates, while based largely on October-November numbers, also have a built-in estimate for December.
"With October-November industrial production levels just 0.4 per cent below the Q3 averages, this already implies a sharp sequential plunge in December's industrial production and/or significant downward revisions in the October-November data," he said.
Broadly speaking, the dip in December's PMI is consistent with the implied drop in December's manufacturing output in the flash estimates.
Credit Suisse's Michael Wan noted that given the weak leading relationship between the PMI and manufacturing, it was difficult to use the Singapore PMI to gauge manufacturing activity.
"In addition, we can't rule out an upward revision to the third quarter (number), even if the fourth quarter (figure) is revised down," he said.