Thu, Apr 02, 2015 page13

• PMI rises on increase in new orders, production

  CONTRARIAN VIEW: While the official PMI reading demonstrated robust growth, HSBC’s survey showed a decline, suggesting a slowdown in business conditions

  • By Crystal Hsu / Staff reporter
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  The official purchasing managers index (PMI) recovered last month, driven mainly by an increase in new orders and production, the Chung-Hua Institution for Economic Research (CIER, 中華經濟研究院) said yesterday.

  While holiday distortions lent support, companies in different sectors reported business growth, including exporters of petrochemical products, as crude prices likely had hit bottom, the Taipei-based think tank said.

  The PMI reading was 59.1 for last month, up from 47.8 percent in February, as companies emerged from holiday disruptions and put up stronger business operations, CIER president Wu Chung-shu (吳中書) told a news conference.

  PMI surveys aim to gauge the health of the manufacturing industry, with values above 50 indicating business expansion and scores below the threshold suggesting a contraction.

  Except for companies in the basic materials industry, most are upbeat about their business prospects in the coming six months, Wu said.

  The rosy sentiment came even though the popularity of the Apple Watch, a forthcoming wearable by Apple Inc, remains to be seen, the academic said.

  The sub-index on new orders scored 66.1, up 20.8 percentage points from one month earlier, the CIER survey found.

  Companies in the electronics and optical industries recorded the fastest gains, the survey indicated, consistent with Taiwan being home to the world’s largest contract chipmakers, chip designers and critical component suppliers.

  “While firms hesitate to pass judgement on the Apple Watch [due to hit the market on April 24], many are looking at demand fueled by smartphones, the Internet of Things and Microsoft’s new operating system Windows 10,” Supply Management Institute, Taiwan (中華採購與供應管理協會) executive director Steve Lai (賴樹鑫) said.

  Likewise, the sub-index on production increased to 68.3 last month, from 39.6 in February, as firms resumed normal manufacturing capacity, the survey showed.

  Employment returned to expansion mode as well, with the index higher at 53.7 from 47.7 one month earlier, the survey showed.

  The finding suggests a healthy job market in the coming months, which could drive the unemployment rate further down, Wu said.

  “Tight labor supply is the best wage driver and there is no need for government intervention,” Wu said.

  The business improvement extended to non-manufacturing sectors, with the non-manufacturing index (NMI) climbing to 52.8, from 50.8 one month earlier, a separate CIER report showed.

  Firms in most service sectors saw business pick up and are positive about their outlook, with the exception of the construction industry, the survey said.

  In a related development, HSBC Holdings PLC has a less rosy picture about Taiwan’s manufacturing industry based on its own survey results.

  The British bank’s PMI, compiled by information services provider Markit and released by HSBC, reached 51.0 last month, down from 52.1 in February.

  Markit economist Annabel Fiddes said the decline suggested a slowdown in business conditions at the end of the first quarter, evidenced by weaker growth in new business, slower staff recruitment and only a slight increase in purchasing activity.

  “The latest data suggest that Taiwan’s manufacturing sector may struggle to pick up stronger growth momentum, at least in the near term, unless client demand improves,” Fiddes said in a statement.
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