Uptick in October factory activity as manufacturers gear up for year-end festivities

SINGAPORE - Factories here are gearing up for stronger demand as the year-end festivities approach, according to data on the manufacturing sector out on Tuesday.

October's Purchasing Managers' Index (PMI), an early indicator of manufacturing activity, reached its highest level in more than a year on the back of an increase in both domestic and export orders, as well as an uptick in production and inventory.

Electronics makers, in particular, look to have cranked up production and increased employment on the back of higher demand.

While the overall PMI rose to 51.9 from September's 50.5 reading, the electronics PMI jumped to 52.5 last month from 51.9 in September. This was its highest level since April 2011.

A reading above 50 indicates growth.

The monthly data is compiled by the Singapore Institute of Purchasing and Materials Management from a survey of more than 150 firms.

Singapore's relatively stronger performance deviated from tepid PMIs across the rest of Asia, even as things ticked up in the US and Europe.

Germany helped pull up the euro zone, while the US economy "is probably on a steady expansion path, if at a less inspiring, underlying pace than many seem to believe", said Mr Frederic Neumann, the co-head of Asian economic research at HSBC.

Both South Korea and Taiwan - considered bellwethers for the regional, if not global, industrial cycle - recorded weaker readings in October compared with September.

In China, both the HSBC and the official PMIs indicated a slowdown in new orders, showing that the mainland's "industrial sector...is not heading for a bounce", said Mr Neumann.