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.

The report is produced by the Singapore Institute of Purchasing and Materials Management. Executive director Janice 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.

Economists here told The Straits Times that the local PMI data reflected an improvement in global demand as businesses restock on improved consumer confidence.

alfoo@sph.com.sg