Factory activity hits new high on back of rise in manufacturing employment

This article is more than 12 months old

Factory activity continued to expand last month and hit a new high for the 13th straight month on the back of stronger growth from electronics.

The performance is also attributed to a rise in manufacturing employment after four months of contraction.

The Purchasing Managers' Index (PMI) - an early indicator of manufacturing activity - was at 52 last month, up by 0.2 point from August's level of 51.8. This is the highest reading since November 2014.

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

The Singapore Institute of Purchasing and Materials Management, which compiles the PMI, said the reading was driven by a faster rate of expansion across all key indicators. New orders, export demand and output were all up.

The electronics sector gained 0.4 points from August to post a reading of 53.6 - its 14th straight month of expansion and the highest level since November 2010.

DBS economist Irvin Seah noted that the manufacturing sector grew 11.2 per cent in the first eight months of the year - the highest since April 2011.

September's PMI reading "shows that the party is not ending yet", he said.

Mr Seah said the improved reading for the electronics sector was in line with the latest industrial production data, in which electronics output surged 38.7 per cent.

Still, Ms Selena Ling, head of treasury research and strategy at OCBC Bank, said the electronics industry "may have peaked and could be taking a breather soon", given the order backlog and finished goods indices have slowed from a month ago, while the deliveries index shrank after seven straight months of expansion.