Buoyed by incoming new businesses, the nation’s manufacturing sector maintained its growth last month with its purchasing managers’ index (PMI) edging up to 62.7 points from 62.5 in February, an HSBC survey showed yesterday.
This indicated a substantial improvement in the manufacturing sector’s business conditions, the bank said in a statement, adding that the sector’s latest expansion was the strongest in four years.
The PMI has been climbing since late 2008 and stayed above a 50-point improvement level for the past year, the survey compiled by Markit on behalf of the bank showed.
The pace of new order growth, however, slowed slightly from February’s 38-month high although it remained comfortably stronger than the long-run average, the report said.
Production capacity also remained constrained, with employment increasing further to meet output requirements, it said.
Considerable increases in costs for raw materials, particularly for metal and petroleum, further pushed up charges for the seventh consecutive month to an all-time high, it said.
Commenting on the latest survey, Frederic Neumann, co-head of the bank’s Asian Economic Research department concluded that the local economy had continued its strong run over the past month, forecasting the sector’s production would hold up well in the near term with inventories lean.
However, the labor market is starting to tighten as firms add more employees, which will likely benefit consumption over the coming quarters, he said in the statement.
“Worryingly, however, firms continue to report strongly rising input and output prices, which may ultimately stoke broader inflationary pressures and a more aggressive monetary policy response,” he said.
Meanwhile, the survey found that suppliers’ delivery times slowed for a tenth consecutive month with anecdotal evidence suggesting that longer lead times reflected increased purchasing activity and had placed pressures on supplier’s operating capacity.
The survey’s panelists noted that shortages of certain items had also delayed deliveries last month.
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