The official Purchasing Managers’ Index (PMI) last month climbed for a third consecutive month to 54.9, another encouraging sign that the nation’s manufacturing sector is stabilizing, the Chung-Hua Institution for Economic Research (CIER, 中華經濟研究院) said yesterday.
The PMI inched up 0.3 percentage points last month from 54.6 in April, continuing to stay above the threshold of 50 in a sign of expansion, the Taipei-based institute’s statistics showed.
“The uptrend over the past three months gives us stronger confidence that the manufacturing sector is stabilizing,” CIER president Wu Chung-shu (吳中書) told reporters at a news conference.
Employment was a main driver of last month’s PMI growth, with a solid gain of 4.1 percentage points to 54.1, Wu said.
Among key sub-indicators, new orders and imports increased 0.6 and 2.8 to 58 and 54.5 respectively, marking a third month of expansion for both, the data showed.
However, CIER said that it was concerned by a sudden dip in the six-month outlook sub-index.
The index fell 4.3 to 56.7 last month after seven consecutive months of increases, Wu said.
“Last month’s improvement is very partial and only limited to information-technology and electronics companies,” Wu said. “Some orders are supported by inventory restocking demand... Not a single company tells me they are confident that a recovery will come soon.”
Some semiconductor companies said they have received orders for Apple Inc’s iPhone 7 model, but order visibility is low on doubts over any new and exciting features that would stimulate replacement demand, CIER said.
The institute said it expects it will take a longer time for Taiwan to start seeing a substantial recovery from an “L-shape” rebound, compared with a “V-shape” revival from the last recession during global 2008 to 2009 financial crisis.
However, the Markit PMI yesterday said the sector was worsening as the index slipped again to 48.5 last month from 49.7 in April.
That signaled a deterioration in the health of the sector for the second month in a row, marking the fastest decline since October last year, the London-based company said in a separate report.
“Taiwanese manufacturers reported a sharper deterioration in overall business conditions in May, with output and new orders both contracting at faster rates than in April,” Markit economist Annabel Fiddes wrote in a statement.
Meanwhile, non-manufacturing indices (NMI) showed a second month of contraction last month, with the decline accelerating 0.9 percentage points to 47.9, CIER said.
It was unusual to see the NMI differ from the PMI, CIER said.
A decline in Chinese tourists is a factor to monitor over the next few months, the institute said.
Complaints from the tourism sector showed that the number of Chinese tourists began to fall rapidly last month after President Tsai Ing-wen (蔡英文) took office, CIER said.
The six-month outlook sub-index for the non-manufacturing sector shrank 4.1 to 36.4 last month, extending the bearish view of the past 12 months.
Commenting on possible monetary policy adjustments at the central bank’s next board meeting later this month, Wu said the bank might still consider monetary easing to boost the economy.
“Taiwan is facing weakness in external and internal demand,” Wu said.
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