Factory activity rose for the 12th straight month in August, posting the highest reading since November 2014 as electronics production picked up pace.
The purchasing managers’ index (PMI) – an early indicator of manufacturing activity – posted a reading of 51.8 last month, up 0.8 points from July’s reading of 51.0.
A reading above 50 points to growth in the sector, while one below 50 indicates contraction.
Almost all indicators showed signs of improvement. New orders, new exports, factory output and inventory levels all expanded at a faster pace.
Even manufacturing employment contracted at a slower rate, posting a reading of 49.8 in August, from 49.3 in July, said the Singapore Institute of Purchasing and Materials Management (SIPMM), which compiles the PMI.
“The latest readings indicated sustained growth in the manufacturing sector since August last year,” it added.
The electronics cluster’s PMI posted a reading of 53.2 last month, rising by one full point from July’s reading of 52.2. This is the highest recorded reading since November 2010.
“Electronics manufacturers are more upbeat about the sector,” said the SIPMM, citing anecdotal evidence.
DBS economist Irvin Seah said: “As we’ve pointed out previously, the manufacturing sector appears to be getting a second wind. Earlier concern about the sustainability of the electronics rally has probably been dismissed for the time being.”
But Mr Seah noted that the PMIs are not seasonally adjusted.
“We reckon that the indexes will continue to creep up for the coming months as manufacturers rush to fulfil the year-end festive season orders. The real test will come towards the end of the year and the lull in the beginning of next year. But between then and now, it’s ‘celebration time’ for manufacturers,” he said.
Source: The Straits Times