The official Purchasing Managers’ Index (PMI) rose to 50.1 last month, from a marginal decline of 49.2 in November last year, as local manufacturers reported stagnating business despite the holiday season, the Chung-Hua Institution for Economic Research (CIER, 中華經濟研究院) said yesterday.
The index, which aims to monitor the health of the manufacturing industry — as the nation is home to the world’s top contract chipmakers, chip designers and laptop and smartphone vendors — returned to the course of slow growth last month, aided by a strong recovery in the US, despite uncertainty elsewhere, CIER president Wu Chung-shu (吳中書) told a news conference.
A PMI value above 50 indicates expansion and scores below the threshold suggest contraction.
The growth last month was marginal, as firms tend to exercise caution and lower their inventory levels rather than produce new goods to fill orders during that time of the year, Wu said. The subindex on new orders, likely the most critical gauge given the nation’s heavy dependence on exports, climbed to 50.2 last month, from a contraction of 47 in November, the CIER report said.
Demand for Apple Inc’s new iPhone smartphones remains robust and wearable devices, as well as the Internet of Things might supply catalysts moving forward, Supply Management Institute Taiwan (中華採購與供應管理協會) executive director Steve Lai (賴樹鑫) said.
Firms in the food, machinery and transportation equipment sectors reported thriving business last month, while companies making chemical and optical products, as well as basic raw materials, continued to suffer from tumbling crude oil prices, the report showed. Companies in the electronics and optical sectors also recorded reduced orders due to the advent of the off season, the report said.
The subindex on output logged 50.3 last month, from 48.7 in November, moving virtually alongside the subindex on new orders, according to the report.
Looking forward, firms expressed more confidence about their business outlook in the coming six months, but the subindex stayed remained below the threshold for growth at 49.8 last month, the report said.
Firms are generally looking at a business upturn ahead, except those in the chemical and raw materials industries, the report said.
HSBC Holdings PLC arrived at similar observations, but sounded an alarm that the stagnation might persist.
The British banking group’s HSBC Taiwan Manufacturing PMI fell to 50 last month, down from 51.4 in November, ending 15 months of increase, the report said.
Taiwan’s manufacturing sector was slowing to a standstill at the end of last year, despite strong performance for much of the year, the HSBC report said.
“The slowdown might not be a one-off, given weak economic data in many of Taiwan’s export markets,” HSBC economist John Zhu (朱日平) said in the report.
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