The activity of factories in Singapore showed expansion for the fourth straight month in December, caused by increases in inventory holdings, new orders and new exports.
Economists expect the upward momentum to continue, at least for the first six months of the year, boosted by a pick-up in activity in key Asian manufacturing hubs as external demand improves.
The Singapore Institute of Purchasing and Materials Management (SIPMM) Purchasing Managers’ Index (PMI) data yesterday (3 Jan) showed a rise of 0.4 point from the previous month to 50.6 in December, above the 50-point mark that separates expansion and contraction.
The production sub-index jumped 0.8 point to 51.1, the new export orders measure rose 0.3 point to 50.7, the measure for new orders up 0.2 point to 50.9, and inventory also increased 0.2 point to 51.0.
TODAY reported the United Overseas Bank’s economist, Francis Tan saying, “We do not see this performance from the manufacturing sector as a one-to-two-month wonder. The overall PMI was led by the electronics portion. The demand growth for semi-conductors under electronics looks to be sustained. So there is no slowdown for the overall PMI at least for the first half of this year. Now the only thing is to hope for positive spillover to other sub-sectors such as business services.”
The electronics sub-index — which comprises about one-third to the country’s manufacturing performance — continued to expand for the fourth successive month, rising 0.7 point from the previous month to 51.2 in December. Manufacturing contributes about one fifth of the Singapore economy.
Last month data from the Economic Development Board showed Singapore’s manufacturing output rose 11.9 percent year-on-year in November 2016, sharply increase from 1.2 percent in October.

Source: Economic Development Board
Source: Economic Development Board
The electronics cluster’s output increased 24.2 percent in November 2016 on a year-on-year basis. Growth in the cluster was largely attributed to the semiconductors segment, which grew 49.6 percent. On a year-to-date basis, output of the electronics cluster expanded 12.8 percent in the first eleven months of the year, compared to the same period a year ago.
ANZ economist, Ng Weiwen was quoted saying, “The strong growth in Singapore’s factory activity was boosted by external demand in the last quarter of the year and the technology sector up-cycle.”
“We noted strong manufacturing performance in the region as well in China, Korea and Taiwan. The sustainability of this, however, hinges on the global economic outlook, as well as United States President-elect Donald Trump’s trade policies.”
“Until Mr Trump reveals his policies, there will be a lot of uncertainty. The protectionist measures on trade and production would impact business and corporate confidence, and lead to ramifications on economies on the whole,” he said.
 

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