MONTREAL - A raft of favorable economic
statistics was released in Singapore at the end of
January, but the latest data point to the
possibility of a slowdown in manufacturing
activity.
Industrial production in
December 2011 unexpectedly grew 12.6% from a year
earlier and 7.8% seasonally adjusted over the
previous month. This is a significant rebound
after November's year-on-year contraction of 9.6%
and 25.2% month-on-month decline. The growth in
December was centered in the biomedical
engineering and transport sectors while
electronics production continued to fall.
The latest data for the Purchasing
Managers' Index (PMI), released this week,
suggest, however, a less positive outlook. The PMI
fell to 48.7 in January, 0.8 points lower than December's
49.5, after a gain that
month from November's 48.7. The PMI reflects
anticipated factory orders and a reading below 50
signals contraction, while one above 50 means
expansion.
On Monday, the government's
latest Business Expectations Survey found that
nearly all sectors in the services sector had a
negative outlook for the period to June, with
retailers most pessimistic, followed by financial
and insurance companies.
The remarkable
success of Singapore's two casino resorts meant
that the one bright area was the recreation,
community and personal services sector, which
overall expected their businesses to improve over
the next five months.
Singapore is
expected to have surpassed Las Vegas as the
world’s second-largest gaming market last year,
behind only Macau, less than two years after the
opening of the city-state's Marina Bay Sands and
Resorts World Sentosa resorts. Visitors from China
and further afield have flocked to enjoy the
resorts' wide range of dining, retail and other
activities that are on offer over and above gaming
tables.
Singapore's exports grew 9% in
December 2011 over December 2010 (non-oil exports
only), surprising the consensus to the upside,
with pharmaceuticals leading the rise (in addition
to high-ticket ship and boat structures), while
electronics exports fell 4.6% year-on-year. Export
diversification to Asia, where growth continues
even if at a generally reduced rate, helped to
buck the trend of declining markets in the US and
other developed economies.
Estimates for
fourth-quarter 2011 gross domestic product (GDP)
growth range from 3.5% to 4%, down from a 6.1% GDP
growth rate in July-September. The third quarter
benefited from a spike in biomedical engineering
exports, just as the fourth quarter benefited from
a pharmaceuticals export spike. The latest
published government expectation for 2012 signals
anemic GDP growth, in the 1-3% range.
Singapore's inflation rate, gauged from
the consumer price index (CPI), fell to 5.5% in
December year-on-year from 5.7% in November, in
line with the consensus estimate. The CPI increase
for the whole year came in at 5.2%. Leading
drivers of the inflation rate are housing, food,
and automotive costs. The central bank’s "core
inflation" measure includes food but excludes the
other two: it was up only 2.6% year-on-year.
Unemployment in 2011 fell to a 14-year low as job
creation remained strong. The unemployment rate in
2011's fourth quarter was 2%, unchanged from the
previous three-month period.
As of early
Wednesday morning local time, the Straits Times
Index was just below 2,900. It has spent the last
five months in the same 2,650-2,950 trading range,
with the exception of a few days in early October
last year that saw it dip down into the 2,500s.
The 2,950 level also happens to mark almost
exactly the midpoint of the index's post-crisis
recovery trading range (based July 2009) with a
post-crisis high in the high 3,100s achieve in
early February and early August last year.
The Straits Times Index is thus in a
situation congruent to the MSCI Asia Pacific
Index, which, now near 123, is at the midpoint
within the second of its three contiguous
post-crisis trading ranges. The present level of
the Singapore equity benchmark at 2,900 is also
the level of a static short-term resistance.
Short-term technical indicators have been
generally favorable but have begun to fade so far
this week.
Above 2,900 there is still the
medium-term resistance at 2,950, which is in turn
surmounted by long-term resistances at 3,130 as
well as several weaker resistances on the way to
get there. Thus, like the MSCI Asia Pacific Index,
the Straits Times Index will encounter its next
significant technical resistance at a level about
5% above where it now stands, if it manages to get
there.
Singapore’s overall economic
performance for December, as for the whole of
2011, must be considered relatively good news by
the ruling People's Action Party (PAP), which the
Singaporean electorate shocked last May by giving
it only 60% of the vote, its lowest percentage in
its 45-year rule, despite which the government 81
of the 87 parliamentary seats up for election.
The election of Tony Tan Keng Yam to the
mostly ceremonial office of president of Singapore
in August 2011, which he won by a mere 0.34%
(7,269 votes of out over 2.1 million cast), may
also be interpreted as a gentle rebuke to the
ruling PAP, as his campaign emphasized his
differences over particular polices from the PAP
government.
The economic news for December
may serve as a mild distraction of public
attention from the ongoing scandal that led, over
last month's Lunar New Year, to the dismissal of
Peter Lim Sin Peng as commissioner of the
Singapore Civil Defense Force and Ng Boon Gay as
director of the Central Narcotics Bureau for
"serious personal misconduct".
According
to a Jakarta Globe reprint of an article
attributed to Straits Times Indonesia, it is
believed that a married information technology
executive, while in a previous job with a Japanese
multinational company, had sex with each of the
men, each unbeknownst to the other. She is
reported now to be assisting the Corrupt Practices
Investigation Bureau in its investigation of them,
which began four to six months ago.
Dr
Robert M Cutler (http://www.robertcutler.org),
educated at the Massachusetts Institute of
Technology and The University of Michigan, has
researched and taught at universities in the
United States, Canada, France, Switzerland, and
Russia. Now senior research fellow in the
Institute of European, Russian and Eurasian
Studies, Carleton University, Canada, he also
consults privately in a variety of fields.
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