Sat, Dec 02, 2017 - Page 12 News List

Manufacturing PMI keeps expanding

By Crystal Hsu  /  Staff reporter

Last month’s official manufacturing purchasing managers’ index (PMI) reached 57.2, remaining above the expansion mark for 21 consecutive months, as new iPhone models benefited local supply chains, the Chung-Hua Institution for Economic Research (CIER, 中華經濟研究院) said yesterday.

It is the longest time that Taiwan’s PMI has stayed in expansion territory without signs of a turnaround, CIER president Wu Chung-shu (吳中書) told a news conference in Taipei.

Apple Inc’s iPhone X might attract more users next year on improved yield rates, Wu said.

“Firms are upbeat that the growth momentum could be sustained ahead of the Lunar New Year holiday,” Wu said.

All PMI sub-indices are holding solid above the neutral point, except for the inventory sub-index at 46.4, the survey showed.

PMI figures above 50 suggest expansion, while values below the threshold indicate contraction.

Taiwanese firms, mostly involved in the sale of electronic components used in global mobile and computing devices, have squeezed inventories to lower cost burdens, Supply Management Institute in Taiwan (中華採購與供應管理協會) executive director Steve Lai (賴樹鑫) said.

The strategy makes them susceptible to steep price hikes in raw materials, as seen in recent months.

The sub-index on raw material prices rose from 72.5 one month earlier to 76.8, the survey showed.

Companies feel more confident building inventories as the global economy fares stronger than expected, Lai said.

Inventories on average last 38 days in Taiwan, compared with 45 days in the US, said Lai, who said local firms should raise inventories of raw materials to better control costs.

The survey showed that foreign-exchange risks have become the top profit challenge for local manufacturers this year.

To combat the effect of volatility in the US dollar, local companies should refine their foreign-exchange management and give quotes in different currencies, Wu said.

The greenback has weakened about 7 percent against the New Taiwan dollar this year.

“Companies should hire currency experts to help manage accounts rather than jump on currency speculation or blame the central bank for related losses,” Wu said.

The non-manufacturing industry also reported business improvement last month, with the NMI standing at 53.4, CIER said.

All service-focused sectors, with the exception of lodging and dining facilities, saw a business pickup, the survey said.

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