Why Singapore's manufacturing sector is poised for a strong finish this year

Industrial output to surge 8%.

According to DBS, industrial production index (Oct13) today will likely show that the manufacturing sector is in for a strong finish for the year.

Here's more:

Headline industrial output is expected to record a healthy 8.0% YoY expansion. While this is a tad slower compared to the 9.3% surge in September, it is nevertheless still stronger than the average monthly output growth of -0.8% YoY between Jan-Aug13.

Plainly, the manufacturing sector has turned the corner from its doldrums that started July last year. Production has been rising over the last two months on the back of the improvement in the global economic outlook.

Electronics, in particular, has seen a surge in export demand. While this could be a result of the year-end festive season demand and sustainability could be in doubt, the point to note is that the global environment should remain favorable for this cluster in the coming months.

Moreover, the pharmaceutical cluster is also out of its industry specific down-cycle and should provide an additional jab in the arm for the manufacturing sector.

On balance, activities in the manufacturing is undeniably picking up. It will most probably end the year on a high note but expect the usual seasonal slump come early next year.