Wed, May 03, 2017 - Page 12 News List

Manufacturing still expanding

SEASONALITY:Traditionally, the first half is the low sales season for tech products, but inventory build-up now takes place six months ahead of new product launches

By Crystal Hsu  /  Staff reporter

The nation’s official manufacturing purchasing managers’ index (PMI) fell to 61.0 last month, easing from 65.2 in March, as local manufacturers reported improved business, although the pace was tempered, the Chung-Hua Institution for Economic Research (CIER, 中華經濟研究院) said yesterday.

“The latest figure suggests continued expansion across the manufacturing sector except textiles and food product suppliers, thanks to strong demand for electronics and optical devices,” CIER president Wu Chung-shu (吳中書) told a news conference.

Despite the slowdown, the PMI stayed comfortably above the neutral mark of 50 as local firms started to benefit from inventory build-up for next-generation electronic gadgets, Wu said.

PMI data aim to capture the health of the manufacturing industry, with scores above 50 indicating expansion and those below suggesting contraction.

Many Taiwanese technology firms are responsible for supplying chips, flat panels, camera lenses, batteries, casings and other critical components for smartphones, smart watches, laptops, desktop PCs and peripheral products.

It is the second consecutive month the measure has been above the 60-point level as technological seasonality is increasingly inconspicuous, said CIER economist Chen Shin-hui (陳馨蕙), who conducts the survey.

Traditionally, the first half is the slow sales season for technology products, but inventory build-up now takes place six months ahead of new product launches, usually slated for September, Supply Management Institute in Taiwan (中華採購與供應管理協會) executive director Steve Lai (賴樹鑫) said, as local firms gain a deeper exposure to the supply chains of global technology brands.

Machinery equipment manufacturers are likely to benefit from inventory build-up earlier than chipmakers and other component suppliers, Lai said, adding that the second half would still be better than the first.

Lai and other economists are also positive about a potential US investment by Hon Hai Precision Industry Co (鴻海精密).

The move would allow Hon Hai and other local firms to take advantage of advanced research and development talent in the US, the world’s largest end-market for technology products, Lai said.

Unlike the Chinese “Red” supply chain that is seeking to replace Taiwanese firms, the manufacturing-in-the-US trend poses a business opportunity for local machinery tool makers, Wu said.

Academia Sinica economics researcher Kamhon Kan (簡錦漢) voiced a similar view, saying investment in the US would help expand the markets of local exporters as they seek to stay competitive.

The non-manufacturing industry also reported a business upturn last month, with the non-manufacturing purchasing managers’ index climbing to 56.3 from 55.1 in March, the CIER said in a separate report.

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