SINGAPORE : Singapore's Purchasing Managers' Index (PMI), an indicator of the manufacturing industry, came in at 50.6 in June, up by 1.6 points over the previous month.

This is the first time in four months that it has held above the boom or bust line of 50. A reading above 50 indicates that the manufacturing economy is generally expanding.

The climb in June's PMI is attributed to an increase in new orders from the overall domestic market, as well as higher levels of production output and inventory.

Song Seng Wun, CEO and Regional Economist, CIMB-GK Research, said: "We did see in the month of June a rebound in orders, both in local and from overseas markets as well. We also saw improved orders leading to increased production. At the same time, we also saw a jump in inventory and stocks of finished goods as well.

"We don't know how this is playing out, whether the jump in inventory and stocks is a function of demand coming through, or more likely demand slowing down, or whether manufacturers are now in a stocking up mode in anticipation that higher costs will eat into their margins in subsequent months. Much will depend on how the global landscape pans out.

"If prices of oil and other materials rise, we may see demand tail off. But certainly at this point, we are quietly confident that at least for the month of June, (we'll see) a much better reading as far as overall manufacturing activities for the tech sector..."

The corresponding index for the electronics sector saw a reading of 51.7, rebounding from a contraction in May. The increase was due to continued growth in new orders from the domestic and overseas markets. - CNA/ms