Bright start to Q4 as Singapore's factory output rises again

IN SINGAPORE: Among the encouraging signs were a PMI reading of 51 for the electronics sector (above), in a ninth straight month of expansion. New factory orders and new export orders also saw higher readings last month from September, as did factory
IN SINGAPORE: Among the encouraging signs were a PMI reading of 51 for the electronics sector (above), in a ninth straight month of expansion. New factory orders and new export orders also saw higher readings last month from September, as did factory production and employment. ELSEWHERE: Rolls of yarn at a factory in Bandung, Indonesia, last month. In Indonesia, the PMI as measured by HSBC rose from 50.2 in September to 50.9 last month. Taiwan and South Korea also saw better readings.ST FILE PHOTO PHOTO: REUTERS
IN SINGAPORE: Among the encouraging signs were a PMI reading of 51 for the electronics sector (above), in a ninth straight month of expansion. New factory orders and new export orders also saw higher readings last month from September, as did factory
IN SINGAPORE: Among the encouraging signs were a PMI reading of 51 for the electronics sector (above), in a ninth straight month of expansion. New factory orders and new export orders also saw higher readings last month from September, as did factory production and employment. ELSEWHERE: Rolls of yarn at a factory in Bandung, Indonesia, last month. In Indonesia, the PMI as measured by HSBC rose from 50.2 in September to 50.9 last month. Taiwan and South Korea also saw better readings.ST FILE PHOTO PHOTO: REUTERS

PMI comes in at expansionary 51.2, reflecting a wider regional pick-up

Singapore's factory output expanded for an eighth straight month in October, in line with a similar pick-up across the region.

In a bright start to the fourth quarter, new data out yesterday showed that the Purchasing Managers' Index (PMI) - a leading indicator of factory output - came in at 51.2 last month. Readings above 50 indicate expansion.

The latest figure beat both September's reading and economists' forecasts.

The PMI is compiled monthly by the Singapore Institute of Purchasing and Materials Management (SIPMM) from a survey of more than 150 industrial firms.

CIMB economist Song Seng Wun said the new figure was "better but not wildly optimistic".

"The reading is consistent with the fairly cautious mood among consumers and businesses...we got over the United States fiscal impasse, but more problems could lie ahead," he added.

Ms Janice Ong, SIPMM's executive director, noted that inventory shrank for a third straight month, "indicating new orders could be expected to beef up production and imports in the coming months".

There were other encouraging signs - the electronics sector expanded for a ninth straight month, posting a PMI reading of 51 last month.

Both new local and export orders also grew at a faster pace last month compared to September.

The index of new factory orders rose to 52.2, from 51 in September. The reading for new export orders was also up, from 51.1 in September to 51.7 last month.

The readings for factory production and employment were also higher than September's.

Singapore's PMI reading last month was in line with expansionary readings from around the world, amid gradually recovering global economic sentiment.

Factory output in China hit an 18-month peak of 51.4 last month, according to official statistics.

Taiwan's PMI, as measured by HSBC, came in at 53, up from 52 in September. In South Korea, the HSBC PMI reading was 50.2, after spending the entire third quarter in negative territory.

Indonesia's HSBC PMI also rose, from 50.2 in September to 50.9 last month.

"Taken together, this paints a global manufacturing picture that is slowly improving," said CIMB's Mr Song.

Mr Lai Ah Keow, managing director of Yokogawa Electric Asia, said the fourth quarter has been "so far so good".

The electronics manufacturer is expecting a 20 per cent increase in sales this quarter, compared to the same period last year.

"Worldwide demand from the petrochemicals, energy, and iron and steel industries continues to be high," said Mr Lai.

chiaym@sph.com.sg