SINGAPORE — Manufacturing activity surged last month to its highest in nearly three years, boosted by the continued expansion in the electronics segment and prompting analysts to upgrade their forecasts for Singapore’s economic growth.

The Purchasing Managers’ Index (PMI) rose 0.8 point from July to 51.8 points last month, showed data released yesterday by the Singapore Institute of Purchasing & Materials Management (SIPMM), well above the 50-point mark that separates expansion and contraction. It marked the 12th straight month of expansion and the highest reading since November 2014, the SIPMM said.

Ms Selena Ling, head of treasury research and strategy at OCBC Bank, said: “We upgrade our 2017 manufacturing growth forecast from 4.7 per cent year-on-year to 5.8 per cent year-on-year, given that the first seven months’ performance was already a stellar 10.1 per cent year-on-year, and leading indicators like the manufacturing and electronics PMIs remain very healthy. Consequently, we also upgrade our 2017 gross domestic product (GDP) growth higher — from 2.5 per cent year-on-year to 2.7 per cent year-on-year.”

The strong performance in last month’s PMI was attributed to improvements in almost all manufacturing indicators, with a faster rate of expansion in new orders, new exports, factory output, inventory levels, and a slower rate of contraction in employment.

“The latest readings indicated sustained growth in the manufacturing sector since August last year,” said SIPMM.

The electronics PMI rose one point from the previous month to 53.2 points, recording its highest reading since November 2010 and its 13th straight month of expansion. All indicators in the electronics sector recorded faster rates of expansion, except for supplier deliveries which expanded at a slower rate. “Anecdotal evidence of the survey suggests that the electronics manufacturers are more upbeat about the sector going forward,” the SIPMM said.

CIMB Private Bank economist Song Seng Wun said the continued strength in the manufacturing sector bodes well for the Singapore economy.

“While we continue to worry about the oil and gas sector, other sectors such as tech, in particular, are doing well. The growth in new orders and exports and increased factory output mean stronger growth and an upside for Singapore’s GDP. The outlook is positive, notwithstanding political risks. Things look good for the rest of the year,” he said.

The Singapore PMI largely mirrored the improvements in regional manufacturing readings.

Mr Frederic Neumann, co-head of Asian Economics Research at HSBC Bank, said the global industrial cycle kicked up a notch last month, with emerging Asia feeling the lift.

“Both of China’s PMI measures turned up, while India and Asean snapped back from contraction in July. Japan’s manufacturing PMI also rose. Solid almost everywhere ... The West is on a roll: Europe is flying, and the improvement in the ISM (Institute for Supply Management index) drowns out the dip in the US Markit PMI,” he said.