Manufacturing sector's expansion last month is latest signal of economic recovery
By
Fiona Chan
SINGAPORE'S manufacturing sector is finally showing signs of a turnaround, the latest indication that an economic recovery could soon be under way.
Factory output increased last month for the first time since August last year, on the back of more orders and higher inventory levels, according to the latest Purchasing Managers' Index (PMI) released yesterday.
The monthly index, a widely watched barometer of the health of the manufacturing economy, indicates that output has risen when its reading is above 50.
It rebounded last month to post a reading of 51.2, up from 49.2 in April and the first expansion in nine months.
New orders increased for the first time in nine months and new export orders rose for the first time in 15 months, pushing up the index, according to the Singapore Institute of Purchasing and Materials Management (SIPMM), which publishes the PMI every month.
The increase in new orders came from higher demand in 'both the domestic and overseas markets', said Ms Janice Ong, SIPMM's executive director. 'This is clearly a positive sign of an increased optimism among our local manufacturers and consumers.'
Electronics output, which had already bounced back into growth territory in April, maintained its strength, expanding for a second month in a row. The electronics PMI posted a reading of 52.9, up from 51.6 in April.
Not only did new electronics orders grow at a faster pace last month than in April, but manufacturers' stocks of finished goods continued to shrink, said Ms Ong. This signals 'good prospects' for electronics output in coming months as production is revved up to meet increased demand.
But manufacturers appear to be still cautious about the economic outlook, added Ms Ong. Anecdotal evidence from the PMI surveys showed that firms continued to clear their stocks at 'very low prices' last month and shelved their hiring plans.
'Manufacturing and electronics employment continued to contract, indicating poor sentiments in the employment market,' she said.
Read the full report in Wednesday's edition of the Straits Times
