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Industrial output gauge climbs on strong exports

FACTORY orders continued to pour in for local manufacturers last month, despite the spectre of a global economic slowdown.

This was among the key findings of a forward-looking indicator called the Purchasing Managers’ Index (PMI).

Strong export orders pushed the PMI from 52.9 in October to 53.8 last month, the sixth straight month that the index had gained.

Compiled from a monthly survey of purchasing executives at more than 150 manufacturing companies, a PMI reading above 50 indicates an expansion in the industrial sector.

The overall new orders index was 57.6, the highest reading since August 2004.

Besides more orders, factories also reported higher output last month, the index indicated.

Despite entering its ninth month of export decline, the electronics industry, according to the PMI, appears to be in the pink of health.

The electronics sector PMI was 53.7, indicating a 16th month of expansion, buoyed by rising orders.

The Singapore Institute of Purchasing and Materials Management produces the report.

Its executive director, Ms Janice Ong, said the PMI showed that ‘the local manufacturing economy is likely to be on a path of growth towards the end of the year’.

There was a concern earlier that demand for overall new orders in the overseas market was slowing down, she noted.

‘However, it may not be the time to pop the champagne yet, given that the United States economy may well experience a sharp slowdown due to the sub-prime problem, deteriorating housing demand, as well as escalating oil prices,’ Ms Ong added.

Manufacturers must also contend with rising input costs and supply shortages, which will affect their bottom lines, she said.


Source: The Straits Times 5 Dec 07

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