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SINGAPORE firms posted an improvement in operating conditions in August, with the headline Nikkei Singapore purchasing managers' index (PMI) rising to 52.3 from July's 50.7.
Although this represented only a modest strengthening, the latest reading signalled the fourth consecutive monthly improvement, said IHS Markit, the financial information services provider which compiles the index.
Both output and new orders rose further and at faster rates than in the previous month.
"However, data indicated that the upturn in total new work was largely driven by improved domestic demand, as new export business fell for the sixth month in a row," said IHS Markit.
Even so, stronger overall demand and a "solid accumulation of outstanding work" led firms to increase their staffing levels for the first time since February.
IHS Markit forecasts a 1.7 per cent expansion in Singapore GDP in 2016.
Said IHS Markit economist Annabel Fiddes: "PMI data indicated that Singapore's private sector stepped up a gear in August. Output rose solidly, helped by the strongest rise in total new work for nearly a year-and-a-half. This translated into some much welcome news for the labour market, with firms increasing their headcounts for the first time in six months.
"Demand from overseas remained weak, however, with export sales declining for the sixth month running. Therefore, it appeared that stronger domestic demand supported the latest rise in new work, as challenging global economic conditions continue to weigh on new export business."