Tue, Oct 04, 2016 - Page 12 News List

PMI rises to 56.5 on handset demand

MODEST PACE:The launch of next-generation devices by Huawei, Oppo Mobile and Apple are contributing to the upswing in manufacturing health, analysts said

By Crystal Hsu  /  Staff reporter

The manufacturing purchasing managers’ index (PMI) increased to 56.5 last month, staying in expansion territory for the seventh consecutive month as demand for new-generation handsets fared stronger than expected, lending support to local firms in that supply chain, the Chung-Hua Institution for Economic Research (CIER, 中華經濟研究院) said yesterday.

The latest PMI data bode well for the nation’s export-focused economy, which might continue to improve at a slow but stable pace, CIER president Wu Chung-shu (吳中書) said.

“The economy has embarked on the course of recovery for a while, despite the pace being modest,” Wu told a news conference.

The PMI aims to gauge the health of the manufacturing industry, with scores above 50 indicating expansion and scores below the threshold suggesting contraction.

Wu attributed the upswing primarily to the launches of next-generation mobile devices by Apple Inc, a well as Chinese firms Huawei Technologies Co (華為) and Oppo Mobile Telecommunications Corp (歐珀移動).

Taiwan is home to the world’s largest contract chipmakers, chip designers and suppliers of camera lenses, batteries and other electronic components.

The fast-growing Internet of Things sector also lent a helping hand, CIER said.

The sub-index on new orders gained 2 points to 59.3, while the reading on output increased 2.6 points to 59.9, according to the Taipei-based think tank’s monthly survey.

The upturn encompassed most sectors, with firms involved in making food, textile products and basic raw materials not improving, the survey found.

The private Nikkei Taiwan Manufacturing PMI showed similar results with a reading of 52.2, the highest in two years.

“The PMI data show a steady build of momentum across the manufacturing industry as client demand strengthened across domestic and international markets,” said Annabel Fiddes, an economist at IHS Markit, which compiles the survey.

CIER researcher Chen Shin-hui (陳馨蕙) said battery explosion problems plaguing Samsung’s Galaxy Note 7 devices boosted sales of other brands.

The landscape looks brighter this quarter and beyond given the increase in backlogs and unfinished work, the CIER and Nikkei surveys said.

The six-month outlook tracked by CIER stood at 53.5 last month, meaning most firms expect business improvement, Wu said.

The expansion mode extended to non-manufacturing sectors as the non-manufacturing index was 51 last month, above the neutral mark for the fourth consecutive month, CIER said.

However, firms in non-manufacturing sectors are downbeat over the business outlook, dragging the six-month outlook index to 40.9, worse than 43 recorded one month earlier, the survey said.

Declines in Chinese tourism and property transactions weighed on the sentiment, Wu said.

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