Factory activity continued to expand at a robust pace in October, rising for the 14th straight month to hit an eight-year high.
The data indicates that manufacturing – which makes up a fifth of the economy and has been its brightest spot this year – is still going strong on the back of broad expansion across most segments, economists said.
The purchasing managers’ index (PMI) – an early indicator of manufacturing activity – came in at 52.6 last month. This was up from 52 in September and also the highest reading since December 2009.
A reading of 50 and above indicates expansion.
The Singapore Institute of Purchasing and Materials Management (SIPMM), which compiles the PMI from a monthly poll of purchasing executives at about 150 industrial firms, said the data showed broad-based expansion across most sectors. Manufacturing employment also recorded its second straight month of growth.
The survey also showed PMI for the electronics sector came in at 53.3 last month – down slightly from 53.6 in September but still expansionary. This was the 15th straight month of growth in electronics.
The marginal dip in growth was attributed to a slower rate of expansion in most key indicators, said the SIPMM.
“Anecdotal evidence from the survey suggest that most electronics manufacturers were concerned about the impact of digital innovations on their businesses,” its report added.
DBS senior economist Irvin Seah said the continued uptick in overall manufacturing PMI “confirms that rally in manufacturing continues unabated”.
The easing in electronics PMI indicates that the sector is entering a seasonal lull, he added.
“The PMI is not seasonally adjusted, which means that typically towards the tail end of the year there will be some moderation in PMI indices,” said Mr Seah.
“Still, overall new orders and new export orders are holding up and this is a multi-year high from a level perspective, which continues to point to a strong performance in the coming months.”
The Ministry of Trade and Industry (MTI) expects manufacturing to have expanded 15.5 per cent in the third quarter, according to advance estimates, which mainly take into account data from the first two months of the quarter. But economists expect this figure to be revised upwards on the back of better-than-expected growth in the sector.
UOB economist Francis Tan said the data here bucked the regional trend – PMIs elsewhere in the region, including in Indonesia, Taiwan and South Korea remained in expansionary territory but edged lower in October.
China’s official manufacturing PMI for October also missed expectations, coming in at 51.6, down from 52.4 in September.
“(The regional slowdown) could be a seasonal effect, or a result of the electronics cycle peaking,” said Mr Tan.
Still, the overall outlook for manufacturing remains positive.
“For the whole year it’s been very much an electronics story in Singapore, but we’re now seeing growth broaden out to other manufacturing clusters even as electronics expansion moderates. The fact that manufacturing employment continued to grow is also a good sign,” he added.
Source: The Straits Times