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A Look at the Week’s Global Economic Events

We take a look at global economic updates or interesting key developments that investors can take note of. This week’s edition sees us looking at what’s happening with the manufacturing activity here in Singapore in addition to other Asian countries like China, Japan, South Korea.

The changes in manufacturing PMI (Purchasing Managers Index)

According to the quarterly assessments of a number of Asian manufacturing giants, their economies seem to be stumbling.  For starters, recent manufacturing PMIs for both China and Indonesia were at multi month lows. Meanwhile, Japan’s recent increase in sales tax for the first time in 17 years has made its business outlook even weaker. Fortunately, there were some bright spots with South Korea showing data that suggests a recovering economy.

In China, although official surveys revealed a marginal increase in the country’s PMI from 50.2 in February to 50.3 in March, HSBC’s own competing Purchasing Managers Index reached a multi-month low after a contraction from 48.5 to 48.0. There are fears by economists that the world’s second largest economy will encounter further weakness.

Moving over to Japan, the past three months had also seen business sentiment slide downwards and the trend is expected to continue owing to the sales tax increase (from 5% to 8%) that came into effect at the start of this month. In any case, Japan’s leadership is also faced with the daunting task of shoring up the country’s revenues after a long period of deflation.

Meanwhile, it’s a different story in Singapore and Korea, perhaps owing to the flexibility and nimbleness that both countries possess. For example, South Korea indicated a rise in its manufacturing gauge to 50.4% in March as compared to February’s 49.8%. It is partly attributable to a recovery in the Western countries as there was a 17% and 15.2% increase in shipments to US and the European Union respectively.

In Singapore, we have anecdotal pieces of information of an improving manufacturing climate besides having a PMI of 50.8 in March (anything above 50 signals an increase in manufacturing activity from the previous month); Manufacturing companies such as UMS Holdings (SGX: 558), Venture Corp (SGX: V03), and electronic components distribution firm Serial Systems (SGX: S69) have all reported increased profits recently.

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The information provided is for general information purposes only and is not intended to be personalised investment or financial advice. Motley Fool Singapore contributor James Yeo does not own shares in any companies as mentioned.