MANUFACTURERS in Singapore appear to have beefed up their workforces ahead of the year-end peak season, after enjoying brisk business last month.

The Purchasing Managers' Index (PMI), a key forward-looking indicator for the industrial sector, recorded its highest reading in 10 months while the employment index was at its strongest since December 2000.

Increasing new orders, especially from export markets, were behind the robust showing.

Economists said factories supplying parts to assembly plants in China may have been rushing to fulfil orders before the country's Golden Week national holiday this week.

But the economists pointed out that rising oil prices are already raising input costs and leading indicators for the global semiconductor industry remain anaemic.

The overall PMI clocked in at 53.9 last month, rebounding from a dip in August to 51.7. The employment index jumped four points to 54.7. A PMI reading of more than 50 indicates expansion, while one below 50 suggests a contraction.

'After a short breather in the holiday-shortened August, the latest PMI reading suggests that manufacturers were very busy at the end of the third quarter,' said CIMB-GK economist Song Seng Wun.

In the key electronics industry, the index posted a 1.3 point rise to 54.7, the highest reading so far this year. Coupled with a strong reading of 53.5 for the sector's employment index, the long-awaited recovery appears to be well under way.

'It's about the time to ramp up production to meet Christmas deliveries,' said Standard Chartered Bank economist Alvin Liew.

All in, manufacturers look set for a strong third quarter, after output grew 18 per cent on average in July and August. Mr Song reckons this may help boost full-year economic growth beyond 8.5 per cent.

Looking ahead, the outlook for manufacturing seems to be good. Factories are keeping more inventory and importing more raw materials, in preparation for the months ahead.

'Anecdotal evidence points to an accumulation of finished goods in anticipation of possible price hikes,' said Ms Janice Ong, executive director of the Singapore Institute of Purchasing and Materials Management, which compiles the monthly PMI.

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