The HSBC manufacturing purchasing managers’ index (PMI) for Taiwan rose to 51.2 last month, from 50.2 a month earlier, as internal and external demand picked up for the fourth consecutive month, the British banking group said in a report yesterday.
Taiwan’s PMI reading gained a full point last month as local and foreign buyers placed more orders amid the improving economy, HSBC Greater China economist Donna Kwok (郭浩庄) said in the report.
“Taiwan’s manufacturers are back from their Lunar New Year holiday, pushing March’s PMI up to a two-month high,” Kwok said. “The trend underpins our view that GDP maintained positive growth in the first quarter of this year.”
HSBC expects Taiwan’s export-focused economy to expand by 3.8 percent in the first quarter of this year, compared with 3.7 percent three months earlier.
The PMI aims to shed light on the condition of the nation’s manufacturing industry. A score above 50 suggests expansion, while any value below 50 indicates a contraction.
For the first three months, the PMI saw a significant increase, with an average reading of 51, reversing the contraction of 48.6 and 46.4 seen in the third and fourth quarter of last year respectively.
The inventory of finished goods continued to decline, but at a slower pace than in February, the report indicated.
The quantity of purchases rose for the fourth straight month, suggesting a more optimistic outlook among manufacturers, the report said.
Output prices contracted for the 12th straight month, although prices contracted at a slower pace in the first quarter than three months earlier, even though input costs increased in the past six months, the report said.
Manufacturers are still refraining from passing on higher input costs to their customers due to the competitive environment, Kwok said.
The employment index dipped slightly into contraction, but hovered close to the neutral mark of 50, suggesting steady employment levels, the economist said.
“Taiwan’s manufacturing and economic conditions have improved, but the size of improvement remains modest,” she said.