Singapore's factory activity in August was bolstered by rising demand for artificial intelligence-related technologies, as more and more companies relied on AI for their business function.

The manufacturing output grew significantly, up 15.4% year on year during the month, stronger than 6.9% in July, according to Monday data from the Economic Development Board.

This month's manufacturing output missed the 17.1% forecast made by Bloomberg-surveyed analysts, according to the Straits Times, but exceeded Trading Economics' prediction of 6% growth.

Excluding biomedical manufacturing, the manufacturing output jumped 17%, compared to 8.2% in the prior month.

Among clusters, precision engineering jumped the highest due to higher production of semiconductors, rising 33.9% from the prior year. Growing AI-related demand was also a major factor in placing electronics as the second-highest cluster with a 28.5% increase.

A study from McKinsey Insights published Aug. 25 showed that the number of large enterprises nearly doubled the use of AI agents, with 44% of respondents scaling up the use of AI across their enterprise, up 38% a year earlier.

Meanwhile, transport engineering grew 9.5% due to higher production of aircraft parts and maintenance, repair and overhaul of commercial airlines.

Almost all clusters rose in August, except chemicals, which dropped 12.7% year on year.