The nation’s manufacturing activity expanded for the 13th straight month last month, with the official purchasing managers’ index (PMI) rising to its highest level in a year, according to a report released yesterday by the Chung-Hua Institution for Economic Research (中華經濟研究院, CIER).
The PMI reading stood at 60.6 last month, up 10.3 points from a month earlier, marking its highest level since March last year, the Taipei-based think tank said.
A PMI of 50 and above represents expansion and less than 50 signifies a contraction.
The index — a leading indicator of the economic outlook over the next three to six months — comprises five sub-indices: new orders, production, employment, inventories and supplier deliveries.
CIER president Wu Chung-shu (吳中書) attributed the sharp rise in the PMI last month to seasonal factors, as the Lunar New Year holiday, which fell in February this year, dragged down its monthly number of working days and lowered the comparison basis.
“The current economy in Taiwan is still in a pace of mild recovery,” the CIER president told a press conference.
The strong performance of new orders and production was the major driver for the PMI last month, as the subindex of new orders climbed by 16.9 points to 65.7 points last month from a month earlier, while the production subindex surged to 64.6, up 21 points from February, and the other three subindices remained in expansion territory last month, the report said.
The nation’s six main industries — chemicals, biotechnology and medical; raw materials; transportation; electronics and optical; food and textiles; and electrical and mechanical — showed expansion last month from February, the report said.
However, a separate PMI report issued by British bank HSBC PLC and compiled by Markit, a London-based financial data provider, showed a manufacturing activity reading that fell to 52.7 last month, the lowest in six months, from 54.7 in February.
HSBC said the latest data signaled a further improvement of overall business conditions faced by Taiwanese manufacturers last month, although the rate of improvement slowed to the weakest since September last year because of the weaker expansions of both manufacturing output and new work last month.
Hong Kong-based HSBC economist John Zhu (朱日平) said the economy’s growth momentum had slowed after the Lunar New Year.
“Much will depend on how external demand evolves in the coming months. For now, new orders are still growing and there have not been signs of excessive stock building, which should keep output growth positive, albeit at a lower pace,” Zhu said in a statement.
Additional reporting by Kevin Chen