Wed, Jan 03, 2018 - Page 12 News List

PMI continues rise with no end in sight, analysts say

By Crystal Hsu  /  Staff reporter

Taiwan’s manufacturing purchasing managers’ index (PMI) rose to 58 last month from 57.2 a month earlier, as demand for all product categories remained strong amid global economic improvement, the Chung-Hua Institution for Economic Research (CIER, 中華經濟研究院) said yesterday.

The economic barometer has expanded for 22 straight months and could expand further without signs of a turnaround on the horizon, with the exception of seasonal disruptions during the Lunar New Year holidays, the Taipei-based think tank said.

“The healthy PMI reading came despite sales of Apple Inc’s latest iPhone series proving weaker than expected, thanks to a more diversified portfolio among local manufacturers,” CIER president Wu Chung-shu (吳中書) told a news conference.

PMI figures seek to capture the pulse of local manufacturers, which play a critical role in Taiwan’s export-oriented economy, with values above 50 suggesting expansion and below indicating contraction.

In the past, Taiwanese buyers have had to wait for weeks for the latest iPhone gadgets, but no wait is necessary for the iPhone X or iPhone 8 models, indicating a slowdown in sales worldwide, Wu said.

Taiwan is home to suppliers of iPhone chips, camera lenses, casings and other critical components, as well as assemblers.

Lackluster sales accounted for a slump in shares of local suppliers, such as Largan Precision Co (大立光) and Hon Hai Precision Industry Co (鴻海精密), after Apple reportedly cut orders by 30 to 40 percent, Supply Management Institute in Taiwan (中華採購與供應管理協會) executive director Steve Lai (賴樹鑫) said.

Sales could deteriorate further after Apple admitted to slowing down the performance of older iPhone models to force upgrades, a move that could alienate users, Lai said.

“The trend demands close attention,” Lai said, as Apple suppliers make up a significant share of the local economy.

The sub-index of new orders advanced from 57.2 to 58.1 last month, while the output measure grew from 57.7 to 62.3, a CIER report showed.

Export orders rose marginally to 55.6, while headcount levels held virtually steady at 54.3, the report found.

Firms generally maintained low inventory with the sub-index standing at 45.2 to avoid unnecessary production costs, the CIER said.

The practice reflects a lack of management skills and confidence, although firms are upbeat about their business prospects in light of the six-month outlook gauge that showed 58.8, Wu and Lai said.

Non-manufacturing firms also reported a pickup in business activity with the non-manufacturing index holding firm at 53.3 last month, compared with 53.4 a month earlier.

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