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Singapore expands manufacturing
SINGAPORE (Reuters) -- Singapore's manufacturing activity expanded for a third straight month in August, propelled by the electronics sector, latest figures show. But analysts said Thursday the pace of expansion was below expectations. The Purchasing Managers' Index dipped to 51.3 from an eight-month high of 51.4 in July but held above the key 50 threshold mark for a third straight month, the Singapore Institute of Purchasing & Materials Management said. A score under 50 indicates contraction while above that level signals expansion. "Singapore manufacturing is still limping along. It is not as strong as it should be given this time of the year; factories should see the pick up now," said Song Seng Wun, economist at GK Goh Securities. "It still signals expansion but the pace is not as good as expected. I had expected a reading of 52 for the PMI. There is recovery but manufacturers are still cautious," said Lee Wee Kiat, economist at DBS Bank. The technology sector held up well with the electronics PMI up 0.3 percent to 52.4 percent, its best reading in a year. "The tech side did perform in line and shows that the sector is picking up a bit of pace going into the peak production period for the year," said Song. The rise in Singapore manufacturing sector mirrors the gains seen in its largest export market. The U.S. Institute for Supply Management said on Tuesday its August manufacturing index rose to 54.7, the highest since December last year, from 51.8 the prior month. In Singapore, where manufacturing makes up a quarter of the domestic economy, activity was led in August by a second month of expansion for the electronics sector, where the index rose 0.3 percentage point to 52.4. But the survey of around 150 companies, which chimes with a recent central bank poll of private economists that forecast a third quarter rebound in the island's economy, also showed factory owners stepping up layoffs in the sector. New export orders and inventories were also down. "However, the decline was cushioned by an increase in new order intakes, as well as a marginal increase in production output," the institute said late on Wednesday. Exports are expected to fuel a rebound in the trade-dependent economy in the July to September quarter after its biggest contraction on record in the three months to June, according to the poll by the Monetary Authority of Singapore. Singapore's economy contracted 4.2 percent in the June quarter in year-on-year terms and suffered its deepest quarterly contraction with an annualized 11.4 percent fall in seasonally adjusted terms. The 23 economists polled by the Monetary Authority last month cut their growth forecast for this year to 0.8 percent, which is little more than half the 1.5 percent growth they estimated in the June survey. The government last month slashed its official estimate for 2003 growth to zero to one percent from 0.5 to 2.5 percent, due to the effects of the deadly SARS virus. The Purchasing Managers' Index is a composite index based on the diffusion indices of leading market Indicators, with varying weights applied. Copyright 2003 Reuters. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed.
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