Singapore's manufacturing sector extended its growth streak in the new year, with factory activity rising for the 17th straight month in January against a background of synchronised global growth.
The latest Purchasing Managers' Index (PMI) - an early indicator of manufacturing activity - rose from 52.8 in December to 53.1 last month - the highest reading since December 2009. A reading of 50 and above indicates expansion.
Electronics manufacturing, however, saw growth easing for the second month in a row - but manufacturers remain optimistic.
The Singapore Institute of Purchasing and Materials Management (SIPMM), which compiles the PMI from a monthly poll of purchasing executives in over 150 industrial firms, said the figure "marked a good start to the year for the manufacturing sectors, which was boosted by the non-electronics sectors".
Singapore's figures are in line with strong global manufacturing momentum, particularly in the euro zone, where PMI readings are near record highs in Germany and Italy.
The factory figures contribute to a rosy world economic outlook, with stock markets rallying worldwide and the World Bank having raised this year's global growth forecast to 3.1 per cent.
In Singapore, the improved PMI last month was attributed to a faster rate of expansion in factory output, new orders, new exports and inventory. Employment and input prices grew at a slower rate.
OCBC economist Selena Ling expects manufacturing growth to ease from last year's double-digit rate - 10.4 per cent year-on-year - to a more modest 5 per cent year-on-year for this year.
Electronics manufacturing expanded for the 18th straight month last month, but at a slowing rate for the second month in a row.
The electronics sector's PMI for last month was 52.9, down from 53.2 in December.
The lower reading was attributed to slower growth in new orders, new exports and factory output. However, faster growth was seen in employment, inventory, stocks of finished goods, input prices and supplier deliveries.
The electronics order backlog contracted for the first time after expanding for 12 consecutive months.
Ms Ling said the latest figures suggest the electronics industry's momentum peaked last November.
"The divergence between the two PMI readings suggests that the manufacturing momentum had diversified beyond electronics," she said.
She noted that in the recent Business Expectations Survey, the electronics cluster was the least upbeat, whereas precision engineering was the most optimistic.
After outperforming at 34.6 per cent growth year-on-year last year, the electronics sector's expansion should also moderate to high single-digit growth this year, she added.
But SIPMM said anecdotal evidence suggests that electronics manufacturers are still optimistic about continued growth, despite the recent slowing rate of expansion.
PTS Technologies chief executive Albert Loh, for instance, expects growth of 10 per cent to 15 per cent this year, mainly from customers in the United States and Britain.
He said: "Generally, I think the electronics market will be relatively buoyant in 2018, especially in the higher-tier market like RFID (radio-frequency identification) and Internet of Things where most of our business activities are currently based."
