Last month’s official manufacturing purchasing managers’ index (PMI) rose to 65.2, the highest figure since its inception in July 2012, benefitting from strong worldwide demand and February’s fewer working days which led to a low base, the Chung-Hua Institution for Economic Research (CIER, 中華經濟研究院) said yesterday.
“The latest PMI data reflected a solid increase in new business and production among local manufacturers,” CIER president Wu Chung-shu (吳中書) told a news conference in Taipei.
The economist shrugged off concerns raised by reporters that the nation’s economy might be overheating and in danger of crashing, saying that Taiwan remains on course for a stable and modest recovery.
The PMI, a gauge of the health of the manufacturing industry, also climbed to a record high last month and has posted 13 consecutive months of expansions.
PMI scores above 50 indicate expansion and values below the threshold suggest contraction.
The low base helped contribute to last month’s sharp 9.4 point increase and some firms moved shipments ahead of schedule to avoid holiday disruptions early this month, Wu said.
A PMI reading of more than 60 would fuel concerns about overheating in the US, Supply Management Institute in Taiwan (中華採購與供應管理協會) executive director Steve Lai (賴樹鑫) said.
Taiwan’s latest PMI reading was between 58 and 59 after seasonal adjustments, he said.
All sectors reported upticks in business, with makers of electronic components and optical devices seeing the fastest paces of increase, the CIER survey found.
The improvement was particularly evident for the nation’s semiconductor makers, who have been able to outcompete foreign peers with the benefit of technological improvements and superior leadership, Wu said.
Meanwhile, the private Nikkei Taiwan Manufacturing PMI showed a score of 54.5, its highest since April 2011, said Annabel Fiddes, economist at IHS Markit, which compiled the survey.
Fiddes attributed the increase to strong demand from clients in China, the US and Europe.
Companies have hired additional staff and pushed input and output prices higher, the research group said.
Firms are upbeat about business prospects in the coming six to 12 months, both surveys found.
The upturn extended to non-manufacturing sectors, lifting the non-manufacturing index (NMI) to 55.1, reversing February’s slowdown, CIER said in a separate survey.
The moderate pace of improvement in the NMI means that ordinary people by and large have failed to benefit from GDP growth and still remain cautious about spending, Wu said.
Slack private consumption would check economic activity, making overheating unlikely, he said.
Restaurant and hotel operators are particularly gloomy, with the six-month outlook index at 30.8, the survey found.