But electronics exports are down, indicating a divergence between measures.
This chart from Maybank Kim Eng shows that the inventory component of Singapore’s electronics Purchasing Managers' Index (PMI) has been climbing since late 2016 and touched a seven-year high in April.
Electronics production gained momentum even as electronics exports continued to contract. Electronics (+17.1%) gathered pace with semiconductors (+27%) remaining the sole driver whilst the rest of electronics declined.
"The persistent divergence between electronics production and exports mirrors the episode in 2Q 2013 to 1Q 2014 during which electronics production was rising whilst exports were plunging," said Maybank KE analyst Chua Hak Bin.
Also read: Is Singapore selling the tech it's making?
Chua noted that a positive interpretation of the divergence could be that orders are being booked in Singapore, but production and shipment are taking place elsewhere (like in Penang). A more cautious interpretation could be that firms are building up inventories in anticipation of higher future demand.
"The risk is that future demand could fall short of expectations, leading to an eventual sharp correction," Chua said.
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