Economy: Sept's PMI of 48.6 contracted deeper than street expectations, down from Aug's reading of 49.3. Factors cited for the drag included declines in new orders, new export orders and production output. Meanwhile, inventory and stockholdings of finished goods continued to expand.
OCBC believes that there may be some improvement in the coming months, supported by the stabilisation in manufacturing numbers for our trade partners in the region, notably in China, South Korea, Taiwan and Malaysia.
The house cited that from the recent slump, a lot of the drop-off was due from offshore and marine kind of activities on the back of the oil price collapse in the fourth quarter of 2014. So some of the base effects will start to work itself out.
That said, there isn't a convincing recovery story either, because there are no demand drivers coming out from China yet.
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