SINGAPORE - Singapore private sector companies signalled the strongest improvement in operating conditions for more than a year-and-a-half in September, led by sharper increases in output and new business.
Notably, new export business increased for the first time since February, the latest Nikkei Singapore Purchasing Managers Index (PMI), released on Wednesday (Oct 5), showed.
However, companies held a relatively cautious stance towards staff hiring, adding to their payrolls only slightly in September.
This in turn contributed to the sharpest increase in backlogs of work since the survey began in August 2012.
The headline Nikkei PMI rose to 52.9 in September from 52.3 in August. A reading above 50 indicates economic expansion, while a reading below 50 points towards contraction.
Private sector output continued to expand in September, with the rate of growth quickening to the sharpest seen since November 2015.
Anecdotal evidence indicated that improved underlying client demand boosted output in September, with overall new work increasing at the fastest rate since June 2014.
The rise in new export sales, though only modest, was the first increase since February.
Said Annabel Fiddes, economist at IHS Markit, which compiles the index: "Singapore's private sector registered its strongest performance in over a year-and-a-half in September.
"However, companies were cautious with regard to employment and inventories, with staff numbers rising only slightly and inventories of goods being depleted at a solid pace. At the same time, improved inflows of new work led backlogs of work to increase at the fastest pace since the series began in mid-2012.
"This could prompt firms to raise output further over the coming months in order to help ease capacity pressures, particularly if client demand shows further signs of improving."
On Monday, a wider PMI index indicated Singapore manufacturing activity in September expanding for the first time in 15 months. The index by the Singapore Institute of Purchasing & Materials Management edged up to 50.1 from 49.8 in August.