Fri, May 02, 2014 - Page 13 News List

Manufacturing rises for 14th month

UPBEAT GOES ON:For the first time, local firms saw new orders and production keep the PMI above 60 for two months straight, burnishing the economic outlook

By Helen Ku  /  Staff reporter

Taiwan’s manufacturing activity continued expanding for the 14th straight month last month as the country’s economy steadily recovered, which prompted increases in new orders from companies and overall production, the Chung-Hua Institution for Economic Research (CIER, 中華經濟研究院) said yesterday.

The institute said its purchasing managers’ index (PMI) reached 60.2 last month, down 0.4 points from 60.6 in March.

A reading of 50 and above represents expansion in production from the manufacturing sector, while less than 50 shows 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.

“The PMI for the first time stayed above 60 for two consecutive months since it was first released in July of 2012,” CIER president Wu Chung-shu (吳中書) told a press conference. “The result of the index indicates the country’s economy continued improving, which is encouraging news.”

Wu attributed the mild decline in last month’s PMI to a higher benchmark, saying that the institute did not expect the index to remain above 60 last month based on local manufacturers’ guidance.

Wu said the index was sustained at its high level mainly because sub-indices on new orders and production respectively rose 1.4 points and 2.2 points to 67.1 and 66.8 last month.

However, inventories remained at a relatively low level of 52.6 last month, compared with 57.9 a month earlier, mainly because the inventories of manufacturers’ client firms continued contracting, Wu said.

The institute said the PMI reading should be interpreted as a trend rather than as an absolute figure. The seasonally adjusted monthly PMI has showed a slow and steady upward trend since October last year, the institute said.

Supply Management Institute in Taiwan (中華採購與供應管理協會) executive director Steve Lai (賴樹鑫) said at the press conference that if the PMI can maintain levels of between 55 and 60 over the coming two months, it would indicate that the economy is in good shape.

Meanwhile, a separate survey by the institute shows that the inventories of local manufacturers’ client firms have been shrinking for nine months in a row, as a sub-index on the specific item resulted in 41.6, compared with 47.2 in March, he added.

By industry, manufacturing activities within the nation’s optical-electronic sector outgrew other sectors last month, with an index of 63.3, the report said.

Manufacturing in the food and textile sector also expanded last month, with an index of 61.6, while raw materials, machinery, chemicals and transportation sectors all increased, with indices ranging from 51.9 to 58.4, the report showed.

Citing a survey by CIER, Wu said up to 66 percent of firms polled forecast the country’s economy would become better in the following six months, more than the 63.7 percent observed in March.

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