Electronics production is at highest level since December 2006
By
Fiona Chan
The unexpectedly healthy electronics PMI reading here is the strongest sign yet that the worst of the global electronics slump could be over. -- PHOTO: BLOOMBERG
THE electronics sector appears to be on the brink of a robust recovery, if the latest Purchasing Managers' Index (PMI) is anything to go by.
The index, an early indicator of upcoming manufacturing demand, showed a surprisingly strong leap in the segment last month, signalling an impending turnaround in the industry.
Overall manufacturing output across all segments is also headed north, with the broader PMI recording higher factory production for the second straight month on the back of more new orders, including export orders.
This could lead to a solid bounce for manufacturing in the second quarter, although full-year growth for the sector is still expected to be negative.
The overall PMI came in at 51.1 last month, slightly below the 51.2 reading in May. A reading above 50 indicates manufacturing is expanding. But the electronics-only PMI gained more ground to post a reading of 55, up from 52.9 in May and the highest level since December 2006.
Economists said the sustained expansions in the PMIs were encouraging and underscored the stabilisation of the key manufacturing sector, which makes up about a quarter of Singapore's economy.
The overall PMI turned positive in May after contracting for eight straight months. Actual manufacturing output, based on data compiled by the Economic Development Board (EDB), turned the corner a month earlier.
However, the strong EDB figures were attributed to a jump in pharmaceutical output, whereas the PMI, compiled by the Singapore Institute of Purchasing and Materials Management (SIPMM), appears to be buoyed mainly by electronics.
OCBC economist Selena Ling said that while the discrepancy is 'a little strange', the fact remains that pharmaceuticals is going strong and electronics may soon follow suit.
Drugs output has surged against the backdrop of the Influenza A (H1N1) epidemic, but the manufacturing sector cannot depend on this segment alone for a true recovery, she added. 'If we started to see positive growth in actual electronics output, we could be more confident about a rebound in manufacturing.'
