Bookmark & Share
SINGAPORE'S all important manufacturing industry expanded again last month, according to a key barometer of industrial health, which soared to a near three-year high.
This suggests that output from the nation's factories is likely to grow in the second half of this year, in a fresh sign of economic recovery.
The latest upbeat data could have been buoyed by festive orders, as the second half of the year has traditionally been the stronger one for businesses, say economists.
The monthly purchasing managers' index (PMI) for August roared in at 54.4 - its strongest reading since November 2006.
It also registered its fourth straight month of growth after eight consecutive months of decline, and was an improvement over the 51.5 mark seen for July.
Any figure above 50 means expansion, while a figure below indicates shrinkage.
The report is produced by the Singapore Institute of Purchasing and Materials Management.
Said its executive director Janice Ong: 'It appears that the positive sentiment in the past months has now been translated into actual consumption of output.'
Ms Ong noted that most components of the overall index were positive, which reinforced the prospect that the manufacturing sector is likely to register positive growth in the second half of this year.
In July, manufacturing output surged unexpectedly, registering its biggest gain since March last year, on the back of booming pharmaceutical production.
Last month's gain in overall PMI was due to further expansion in new orders, and new export orders, production, finished goods, imports and employment.
The key electronics sector grew for the fifth straight month, coming in at 55.2 - a rise of 0.2 point over July.
The production index gained 4.7 points to 58, while the new orders index surged 4.9 points to 55.8.
The employment index inched up 0.4 point to 50.6. July's PMI reading showed this index expanding for the first time in 19 months, suggesting that Singapore's factory owners have begun to hire again.
Economists here told The Straits Times that the local PMI data reflected an improvement in global demand as businesses restock on improved consumer confidence.
It could also mark the start of festive orders kicking in. CIMB-GK regional economist Song Seng Wun noted that new orders posted the highest reading in almost two years, while production rose to its highest reading in five years.
The upbeat data was also in line with stronger readings seen elsewhere in the region and beyond. For instance, China's August PMI data out on Tuesday came in at a 16-month high.
Mr Song said: 'The PMI readings from around the world show manufacturers in a more hopeful mood. This is important because the second half of the year is always the stronger half for businesses.'
This also fuels more optimism that the global economy can avoid a double-dip recession, defined as a downturn followed by a short-lived recovery and then another recession.
OCBC Bank economist Selena Ling said the robust reading was encouraging for Singapore's manufacturing sector in the run-up to Christmas.
But she added: 'The challenge will probably come in the first quarter of 2010, when we get a clearer direction as to the sustainability of these orders, given that the fiscal stimulus may start to wind down in the first half of 2010.'
Search Property News
