FINALLY, some good news has emerged about the economy.

Singapore's factory production unexpectedly rose in September, on the back of a surprise rebound in the volatile pharmaceuticals sector.

Manufacturing output grew 2.4 per cent from a year ago, beating the expectations of economists polled by Bloomberg, who had predicted a 1.4 per cent decline. On a seasonally adjusted month-on-month basis, manufacturing output rose 7 per cent last month over August.

But economists said this was probably not enough to pull the economy out of the technical recession it fell into during the third quarter.

Output growth came mainly from the biomedical sector, which expanded 38.2 per cent compared to the same period last year. This, in turn, was due to a 44.4 per cent rise in the pharmaceuticals segment.

The transport engineering, chemicals and general manufacturing clusters also expanded.

But excluding biomedicals, the 'underlying trend of a manufacturing recession remains intact', said Citigroup economist Kit Wei Zheng.

Without biomedicals, manufacturing output would have fallen 4.4 per cent from a year ago, he said.

Electronics, in particular, continued its slump and is likely to keep dragging down employment and exports. This sector shrank 14.6 per cent last month - its biggest decline since 2002 - largely due to a 68.6 per cent drop in the infocomms and consumer electronics segment.