Business

Factory activity rises to highest since Nov 2014

Almost all indicators show signs of improvement in manufacturing sector


Factory activity rose for the 12th straight month in August, posting the highest reading since November 2014 as electronics production surged to its best showing in nearly seven years.

The Purchasing Managers' Index (PMI) - an early indicator of manufacturing activity - posted a reading of 51.8 last month, up 0.8 points from July's reading of 51.

A reading above 50 points to growth in the sector, while one below 50 indicates contraction.

Almost all indicators showed signs of improvement. New orders, new exports, factory output and inventory levels all expanded at a faster pace.

Manufacturing employment contracted at a slower rate, posting a reading of 49.8 in August, from 49.3 in July, said the Singapore Institute of Purchasing and Materials Management, which compiles the PMI.

"The latest readings indicated sustained growth in the manufacturing sector since August last year," it added.

The electronics cluster's PMI posted a healthy reading of 53.2 last month, rising by one full point from July's reading of 52.2. This is the highest recorded reading since November 2010.

SUSTAIN

One director of a company that manufactures machines for electronics assembly told The Straits Times yesterday that orders from mobile phone makers had picked up and the rise in activity should be sustained till the end of October at least.

The brighter data here mirrored the rest of the region, said OCBC Bank economist Selena Ling. Taiwan, Vietnam, mainland China, India, Indonesia and Malaysia all posted higher PMI readings in August, although Japan, the Philippines, and Thailand recorded declines.

Ms Ling said: "Global semiconductor companies have generally benefited from healthy demand for consumer electronics, data centre activities fuelled by cloud demand, as well as gearing up for the iPhone 8 production cycle and consumers' upgrading demand to mid- to high-end smartphones and other large-screen phablets."

DBS Bank economist Irvin Seah said: "The real test will come towards the end of the year and the lull in the beginning of next year. But between then and now, it is celebration time for manufacturers."

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